Question

Journalize the following transactions for Reed Company. Assume a perpetual inventory system. Also, assume a constant gross profit ratio for all items sold. Make sure to enter the day for each separate transaction.
April 6 Sold goods costing $3,000 to Bennett Company for cash, $5,000.
April 12 Bennett Company returned undamaged merchandise, purchased on April 6, for a cash refund, $630.

Answer 1

Answer:

The Journal entries are as follows:

(i) On April 6,

Cash A/c Dr. $5,000

To Sales                     $5,000

(To record the cash sales )

(ii) On April 6,

Cost of goods sold A/c Dr. $3,000

To merchandise inventory               $3,000

(To record the cost of goods sold)

(iii) On April 12,

Sales return and Allowances A/c Dr. $630

To cash                                                          $630

(To record the sales return)

(iv) On April 12,

merchandise inventory A/c[(630 ÷ 5,000) × 3,000] Dr. $378

To cost of goods sold                                                                     $378

(To record the cost of sales return and allowances