Question

Accounting for sales of Merchandise in a Perpetual recach of the following transactions on the books of the wing transactions on the books of the seller Company Sellers $1.000 of merchandise herchandise cost the seller $700. a ndise to the Buyer on July 11. The terms of the sale are an V The merch Debit Credit Account Titles On July 12, the Buyer returns $ 200 of the merchandise for credit On July 16, the Seller receives the full amount owed by Buyer who takes advantage of the available cash discount. Instead of transaction #4 above, assume that the Seller does not receive payment until July 23, after the discount period has expired.

Answer 1

Journal Entries:

Perpetual Inventory System:
Date	Account Titles and Explanations	Debit	Credit
Jul. 11	Accounts Receivable - Buyer	$1,000
	Sales Revenue		$1,000
	(To record the sales made on account)
Jul. 11	Cost of Goods Sold	$700
	Merchandise Inventory		$700
	(To record the cost of goods sold)
Jul. 12	Sales Returns and Allowances	$200
	Accounts Receivable - Buyer		$200
	(To record the return of merchandise sold on account)
Jul. 16	Cash ($800 - $16)	$784
	Discount Allowed ($1,000 - $200 = $800*2/100)	$16
	Accounts Receivable - Buyer ($1,000 - $200)		$800
	(To record the receipt of amount on credit sales along with discount)
Jul. 16	Cash	$800
	Accounts Receivable - Buyer ($1,000 - $200)		$800
	(To record the receipt of amount on credit sales without discount)