Reflection on Consignment Shipment and Accounting Entries

When Buffalo Corporation receives cash from Gooch Company for the consignment shipment, there are specific accounting entries that need to be made to properly record the transaction.

The first entry involves debiting Cash for the amount received, which is $19,260 ($21,400 - $2,140). The Commission Expense account is debited for the commission retained by Gooch Company, which is $2,140 (10% of $21,400). Sales account is then credited for the total sales amount of $21,400.

The second entry includes debiting Cost of Goods Sold (COGS) for the cost of the goods that have been sold, which is $12,932 (61% of $21,200). Inventory account is credited for the same amount, $12,932.

It is important to accurately record these entries to ensure that the financial statements reflect the true financial position of Buffalo Corporation after receiving the cash from Gooch Company for the consignment shipment.