Use the information in PB6 1 to complete the following requirements
Use the information in PB6-1 to complete the following requirements.
Info PB6-1
a. Southern Sporting Goods sold merchandise to Sports R Us at a selling price of $ 125,000. The merchandise had cost Southern Sporting Goods $ 94,000.
b. Two days later, Sports R Us complained to Southern Sporting Goods that some of the merchandise differed from what Sports R Us had ordered. Southern Sporting Goods agreed to give an allowance of $ 3,000 to Sports R Us.
c. Just three days later Sports R Us paid Southern Sporting Goods, which settled all amounts owed.
1. For each of the events (a) through (c), indicate the amount and direction of the effect (1 for increase, 2 for decrease, and NE for no effect) on Southern Sporting Goods in terms of the following items.
2. Which of the above items are likely to be reported on Southern Sporting Goods’ external financial statements, and which items will be combined “behind the scenes”?
3. Prepare the journal entries that Southern Sporting Goods would record and show any computations.
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