Question

Brief Exercise 5-04 a-c 

Prepare the journal entries to record the following transactions on Kwang Company's books using a perpetual inventory system. 

On March 2, Kwang Company sold $900,000 of merchandise on account to Sensat Company, terms 2/10, n/30. The cost of the merchandise sold was $620,000. (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 o for the amounts.) 

On March 6, Sensat Company returned $90,000 of the merchandise purchased on March 2. The cost of the returned merchandise was $62,000. (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 o for the amounts.) Account Titles and Explanation Debit Credit (To record merchandise returned) (To record cost of merchandise returned)

On March 12, Kwang Company received the balance due from Sensat Company. (Credit account tities 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 o for the amounts.) 

Answer 1

Journal

Date	Account title	Debit	Credit
March 2	Accounts Receivable - Sensat Company	900,000
	Sales		900,000
March 2	Cost of goods sold	620,000
	Inventory		620,000
March 6	Sales returns and allowance	90,000
	Accounts receivable - Sensat Company		90,000
March 6	Inventory	62,000
	Cost of goods sold		62,000
March 12	Cash	793,800
	Sales discount	16,200
	Accounts receivable - Sensat Company		810,000

Working note:

Final amount due = Sales - sales returns

= 900,000 - 90,000

= $810,000

Discount amount = Final amount due x Discount percentage

= 810,000 x 2/100

= $16,200

Cash to be received = Final amount due - Discount amount

= 810,000 - 16,200

= $793,800