Question

On March 12, Klein Company sold merchandise in the amount of $10,200 to Babson Company, with credit terms of 3/10, n/30. The cost of the items sold is $5,700. Klein uses the perpetual inventory system and the net method of accounting for sales. On March 15, Babson returns some of the merchandise, which is not defective. The selling price of the returned merchandise is $840 and the cost of the merchandise returned is $470. The entry or entries that Klein must make on March 15 is (are):

Answer 1

Answer:

Given that,

Merchandise sold = $10,200

Cost of goods sold = $5,700

Selling price of the returned merchandise = $840

Cost of the merchandise returned = $470

Therefore, the journal entry is as follows:

On March 15,

(i) Sales Returns and Allowances A/c Dr. $840

                     To Accounts Receivable $840

(To record the sales returned)

(ii) Inventory A/c Dr. $470

             To Cost of Goods Sold A/c $470

(To record the cost of goods sold)