BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

Solutions

Chapter
Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Sales-related transactions

Showcase Co., a furniture wholesaler, sells merchandise to Balboa Co. on account, $254,500, terms n/30. The cost of the merchandise sold is $152,700. Showcase Co. issues a credit memo for $30,000 for merchandise returned prior to Balboa Co. paying the original invoice. The cost of the merchandise returned is $17,500. Journalize Showcase Co.’s entries for (a) the sale, including the cost of the merchandise sold; (b) the credit memo, including the cost of the returned merchandise; and (c) the receipt of the chock for the amount due from Balboa Co.

To determine

Journalize the given transactions for Corporation S.

Explanation

Sales is an activity of selling the merchandise inventory of a business.

Transaction (a):

Record the sale of merchandise inventory on account.

DateAccounts and ExplanationDebit ($)Credit ($)
 Accounts Receivable254,500 
            Sales Revenue 254,500
 (To record the sale of inventory on account)  

Table (1)

  • Accounts Receivable is an asset and it is increased by $254,500. Therefore, debit accounts receivable with $254,500.
  • Sales revenue is revenue and it increases the value of equity by $254,500. Therefore, credit sales revenue with $254,500.

Record the entry for cost of goods sold.

DateAccounts and ExplanationDebit ($)Credit ($)
 Cost of Merchandise Sold152,700 
 Merchandise Inventory 152,700
 (To record the cost of goods sold)  

Table (2)

  • Cost of merchandise sold is an expense account and it decreases the value of equity by $152,700. Therefore, debit cost of merchandise sold account with $152,700.
  • Merchandise Inventory is an asset and it is decreased by $152,700. Therefore, credit inventory account with $152,700.

Transaction (b):

Record the journal entry for sales return.

DateAccount Title and Explanation

Post

Ref.

Debit

($)

Credit

($)

 Customer Refunds Payable 30,000 
         Accounts Receivable  30,000
 (To record sales returns)   

Table (3)

  • Customer refunds payable is a liability account and decreased by $30,000...

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What are the major elements of design planning?

Foundations of Business (MindTap Course List)

What is the purpose of the EFTPS?

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

To get information about Apples dividend policy, enter its ticker quote (AAPL) and select OVERVIEW FULL REPOR...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)