Question

Brief Exercise 5-3 Prepare the journal entries to record the following transactions on Novak Corp.'s books using a perpetual inventory system. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) (a) on March 2, Novak Corp. sold E758,000 of merchandise to Edgebrook Company, terms 2/10, n/30. The cost of the merchandise sold was E524,000. Account Tities and Explanation Debit Credit (To record the sale) (To record cost of merchandise sold) (b) on March 6, Edgebrook Company returned 113,700 of the merchandise purchased on March 2. The cost of the returned merchandise was 76,064 Account Titles and Explanation Debit Credit (To record merchandise returned) (To record cost of merchandise returned)

Answer 1

Journal

Date	Account title	Debit	Credit
March 2	Accounts Receivable - Edgebrook Company	758,000
	Sales		758,000
March 2	Cost of goods sold	524,000
	Inventory		524,000
March 6	Sales returns and allowance	113,700
	Accounts receivable - Edgebrook Company		113,700
March 6	Inventory	76,064
	Cost of goods sold		76,064
March 12	Cash	631,414
	Sales discount	12,886
	Accounts receivable - Edgebrook Company		644,300

Working note:

Final amount due = Sales - sales returns

= 758,000 - 113,700

= $644,300

Discount amount = Final amount due x Discount percentage

= 644,300 x 2/100

= $12,886

Cash to be received = Final amount due - Discount amount

= 644,300 - 12,886

= $631,414

Kindly give a positive rating if you are satisfied with the answer. Feel free to ask if you have any doubt. Thanks.