E5-2 Example

a) Pippen Company Transactions 1.DRCR Accounts Receivable400,000 Sales Revenue400,000 - To record sale on account Cost of Goods Sold320,000 Merchandise Inventory320,000 - To record cost of Merchandise sold

Pippen Company Transactions 2.DRCR Sales Returns and Allowances 20,000 Accounts Receivable20,000 - Credit given for defective merchandise 3. Cash380,000 Accounts Receivable380,000 -To record payment on Thomas Account

b) Thomas Company Transactions 1.DRCR Merchandise Inventory400,000 Accounts Payable400,000 - To record purchase of inventory 2. Accounts Payable20,000 Merchandise Inventory20,000 - Credit Received for defective merchandise

Thomas Company Transactions 3. DRCR Accounts Payable380,000 Cash380,000 - To record payment of Pippen Account