Question 1:

Dell and Best Buy are in business with each other. Dell sells their electronic items to Best Buy,

who then further sells it to the average consumer and businesses. The following transactions

took place between the companies. Both companies use a Perpetual Inventory System.

01 March Best Buy purchased inventory for resale in the amount of $70,000 from Dell on the

terms 2% discount if paid within 15 days or net payment in 30 days (2/15, N/30) -

FOB Shipping Point

02 March

09 March

The company responsible paid $5,000 for shipping charges

Items shipping from Dell arrived at Best Buy, where it was checked by the tech

staff. Best buy found that some of the products were United States specifications

and not Canadian specifications. Therefore, Best Buy returned these items back to

Dell. Dell provided Best Buy with a $10,000 purchase return

10 March Best Buy paid Dell in full for the amount owed as of March 10th

Important Information for Dell accounts:

A) The Cost of Goods Sold for Dell was $25,000.

B) The Cost of Goods returned by Best Buy was $2,000 and it arrived in mint condition,

ready to be resold to other customers again.

Please complete the following:

1: Show your T-account and General Journal Entries for the above transactions in the records of

Best Buy. That is imagine you are the accountant for Best Buy in recording the transactions.