Question

A seller uses a periodic inventory system, and on April 4, it sold $5,000 in merchandise on credit (when its cost is $2,400) to a customer on credit terms of 3/10, n/30. The customer returned $1,000 of the merchandise on April 8. On April 12, the seller received the full payment due from the customer. Complete the seller's necessary journal entry by selecting the Account Names and dollar amounts from the drop-down menus. The order of the account names in the journal entry must match the illustration set forth in this module.

Answer 1

Answer:

Accounts Receivable 5,000 debit

         Sales revenues                  5,000 credit

COGS                        2,400 debit

          Inventory                          2,400 credit

Sales Returns              1,000 debit

        Accounts Receivable            1,000 credit

Cash             3,880 debit

SalesDiscount 120 debit

       Accounts Receivable      4,000 credit

Explanation:

We record the sales revenues and the account the custoemr will have to setlte.

Then we record the decrease in our invenory for the goods we delivered and recognize the COGS

The return decreases the amount due fro mthe customer.

We aren't given information about the inventory being able to be restored or entering the inventory.

We should assume it is not available for resales, thus we don't increase our inventory.

The customer pays within discount period: "3/10"

3% discount within first 10 days

dsicount: 4,000 x 3% =120

cash collection: 3,880

Wewrite-off the receivable