Question

Prepare journal entries to record each of the following sales transactions of EcoMart Merchandising.EcoMart uses a perpetual inventory system and the gross method.Oct. 1 Sold fair trade merchandise for $1,500, with credit terms n∕30, invoice dated October 1. Thecost of the merchandise is $900.6 The customer in the October 1 sale returned $150 of fair trade merchandise for full credit. Themerchandise, which had cost $90, is returned to inventory.9 Sold recycled leather merchandise for $700, with credit terms of 1∕10, n∕30, invoice datedOctober 9. Cost of the merchandise is $450.11 Received payment for the amount due from the October 1 sale less the return on October 6.

Answer 1

Answer:

EcoMart Merchandising

Journal Entries

Oct. 1 Debit Accounts Receivable $1,500

Credit Sales Revenue $1,500

To record the sale of goods on account with credit terms n∕30, invoice dated October 1.

Debit Cost of goods sold $900

Credit Inventory $900

To record the cost of goods sold.

Oct. 6 Debit Sales Returns $150

Credit Accounts Receivable $150

To record the return of some goods sold on account.

Debit Inventory $90

Credit Cost of goods sold $90

To record the cost of goods returned.

Oct. 9 Debit Accounts Receivable $700

Credit Sales Revenue $700

To record the sale of recycled goods with credit terms of 1∕10, n∕30, invoice dated October 9

Debit Cost of goods sold $450

Credit Inventory $450

To record the cost of the goods sold.

Oct. 11 Debit Cash $1,350

Credit Accounts Receivable $1,350

To record the receipt of cash on account.

Explanation:

a) Data and Analysis:

Oct. 1 Accounts Receivable $1,500 Sales Revenue $1,500  with credit terms n∕30, invoice dated October 1.

Cost of goods sold $900 Inventory $900

Oct. 6 Sales Returns $150 Accounts Receivable $150

Inventory $90 Cost of goods sold $90

Oct. 9 Accounts Receivable $700 Sales Revenue $700 with credit terms of 1∕10, n∕30, invoice dated October 9

Cost of goods sold $450 Inventory $450

Oct. 11 Cash $1,350 Accounts Receivable $1,350