Question

Kate Company uses a perpetual inventory system.

Answer 1

Answer:

The journal entries are as follows:

(a) On July 16,

Account receivable A/c Dr. $1,200

     To sales revenue                        $1,200

(To record Sales)

Cost of goods sold A/c Dr. $720

    To Inventory                            $720

(To record cost of goods sold)

(b) On July 19,

Sales return and allowance a/c Dr. $200

    To Account receivable                         $200

(To record sales return)

Inventory A/c Dr. $120

    To Cost of goods sold   $120

(To record cost of goods return)

(c)  On July 22,

Cash (1,000 × 98%) A/c Dr. $980

Sales discount A/c Dr.         $20

   To Account receivable               $1,000

(To record amount received)