Radomir Company buys merchandise on account from Lemke Company. The selling price of the goods is $780, and the cost of the goods is $470. Both companies use perpetual inventory systems.

Journalize the transaction on the books of both companies.

Answer:

Radomir:

Merchandise Inventory 780 (DR)

Accounts Payable 780 (CR)

Lemke:

Accounts Receivable 780 (DR)

Sales 780 (CR)

Cost of merchandise sold 470 (DR)

Inventory 470 (CR)

Step-by-step explanation:

Given

Selling price of the goods is $780,

Cost of the goods is $470.

Considering that both companies use perpetual inventory systems.

Only the selling price will be entered into Radomir journal as this will serve as Radomir's cost price

Radomir:

Merchandise Inventory 780 (DR)

Accounts Payable 780 (CR)

Both the selling price and the cost price will be entered into Lemke journal to serve as their cost and selling price Radomir's cost price

Lemke:

Accounts Receivable 780 (DR)

Sales 780 (CR)

Cost of merchandise sold 470 (DR)

Inventory 470 (CR)