Chang Industries ships merchandise costing $120,000 on consignment to XYZ Inc. Chang pays the freight of $5,000. XYZ Inc. is to receive a 15% commission upon sale and a 5% allowance to offset its advertising expenses. At the end of the period, XYZ notifies Chang that 75% of the merchandise has been sold for $160,000.
Instructions
Record the entries required by the two companies under the earnings-based approach.