Question

On October 5, Narveson Company buys merchandise on account from Rossi Company. The selling price of the goods is $6,380, and the cost to Rossi Company is $3,310. On October 8, Narveson returns defective goods with a selling price of $740 and a scrap value of $410.Record the transactions of Narveson Company, assuming a perpetual approach. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1

Explanation:

The journal entries are as follows

On the books of Narveson Company

On October 5

Merchandise Inventory A/c $6,380

            To Accounts payable A/c $6,380

(Being inventory purchased on credit)

On October 8

Accounts payable A/c Dr $740

            To Merchandise Inventory A/c $740

On the books of Rossi Company

On October 5

Account receivable A/c Dr $6,380

            To Sales $6,380

(Being the goods are sold on credit)

Cost of goods sold A/c Dr $3,310

              To Merchandise Inventory A/c $3,310

(Being goods are sold at cost)

On October 8

Sales return and allowance A/c Dr $740

                To Accounts receivable $740

(Being sales return is recorded)  

Merchandise Inventory A/c $410

             To Cost of goods sold A/c Dr $410

(Being sales return is recorded)