Use the information in PB6-6 (page 298 in Chapter 6) to complete the following requirements
Information From PB6-6
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.
Required:
1. Indicate the effect (direction and amount) of each transaction on the Inventory balance of Sports R Us.
2. Prepare the journal entries that Sports R Us would record and show any computations.