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Sheffield Company buys merchandise on account from Cheyenne Corp.. The selling price of the goods is $850, and the cost of the goods is $500. Both companies use perpetual inventory systems. Journalize the transaction on the books of both companies. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

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Answer:

See the explanation below

Explanation:

In Sheffield Company books:

Details                                        Dr ($)           Cr ($)

Merchandise Inventory              850          

Accounts Payable                                          850

To record purchase of merchandise inventory on account.

In the book of Cheyenne Corp.

Details                                        Dr ($)           Cr ($)  

Accounts Receivable                850

Sales                                                                850

To record the sale of merchandise inventory on account .    

Cost of Goods Sold                  500

Merchandise Inventory                                 500

To record the cost of merchandise inventory sold on account .    

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