Using the information in Exercise 7:
a. Present the journal entries that Wilson Purchasing should record for these transactions assuming a periodic inventory system.
b. Present the journal entries that Hostel Sales should record for these transactions assuming a periodic inventory system.
In Exercise 7
On May 11, 2014, Wilson Purchasing purchased $25,000 of merchandise from Hostel Sales; terms 3/10, n/90, FOB Hostel Sales. The cost of the goods to Hostel was $20,000. Wilson paid $1,500 to Express Shipping Service for the delivery charges on the merchandise on May 11. On May 12, Wilson returned $4,000 of goods to Hostel Sales, which restored them to inventory. The returned goods had cost Hostel $3,200. On May 20, Wilson mailed a cheque to Hostel for the amount owed on that date. Hostel received and recorded the cheque on May 21.