On May 11, Smythe Co. accepts delivery of $32,000 of merchandise it purchases for resale from Hope Corporation. With the merchandise is an invoice dated May 11, with terms of 3/10, n/90, FOB shipping point. The goods cost Hope $21,440. When the goods are delivered, Smythe pays $695 to Express Shipping for delivery charges on the merchandise. On May 12, Smythe returns $2,780 of goods to Hope, who receives them one day later and restores them to inventory. The returned goods had cost Hope $1,863. On May 20, Smythe mails a check to Hope Corporation for the amount owed. Hope receives it the following day. (Both Smythe and Hope use a perpetual inventory system.)
1.Prepare journal entries that Smythe Co. records for these transactions.
Prepare journal entries that Hope Corporation records for these transactions.