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Powell’s Book Warehouse distributes hardcover books to retail stores and extends credit terms of 2/10, n/30 to all of its customers. At the end of May, Powell’s inventory consisted of books purchased for $1,800. During June, the following merchandising transactions occurred.
June 1 Purchased books on account for $1,600 from Kline Publishers, FOB destination, terms 2/10, n/30. The appropriate party also made a cash payment of $50 for the freight on this date.
3 Sold books on account to Reading Rainbow for $2,500. The cost of the books sold was $1,440.
6 Received $100 credit for books returned to Kline Publishers.
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