On December 15, 2020, Trim-Sails entered into a contract to sell inventory to Flush-with-Funds for $600,000. In a separate contract entered into on the same day, Trim-Sails agreed to buy similar inventory from Flush-with-Funds on January 14, 2021 for $605,000. The financial year ends on December 31 for both companies.

Required:
1. Explain whether the two contracts should be treated as two contracts or one contract.
2. Prepare the journal entries for Trim-Sails to record the transactions on December 15, 2020, December 31, 2020, and January 14, 2021.
3. Prepare the journal entries for Flush-with-Funds to record the transactions on December 15, 2020, December 31, 2020, and January 14, 2021.

Answer rating: 100% (QA)

1 ans REPURCHASE AGREEMENT Allows company to transfer an asset to a customer but having a unconditi... View the full answer