Question

1. February the incre Com . the y e ce conto on February , Elsinore returned 100 worth of inventory to Grimace Co in exchange for a reduction in the amount that it owes. This merchandise cout Grimace $180. Note that we entries are necessary Account Debits 3.On February 14, Elsinore paid Grimace the amount it owes and takes advantage of the purchase discount. Account Debit Credits The next three entries are from the point of view of Elsinore Company which is purchasing Inventory from Grimace. 4. On February 5", Elsinore purchased $4,000 worth of inventory on account on terms of 1/10, 1/30 from the Grimace Company Account Debit $ Credit $

Answer 1

In the books of Grimace Co.:

1	Account	Debit	Credit
	Accounts receivable	$4,000
	Sales revenue		$4,000
	[To record sales revenue]
	Cost of goods sold	$2,400
	Merchandise inventory		$2,400
	[To record cost of goods sold]
2	Account	Debit	Credit
	Sales returns and allowance	$300
	Accounts receivable		$300
	[To record sales returns]
	Merchandise inventory	$180
	Cost of goods sold		$180
	[To record cost of goods returned]
3	Account	Debit	Credit
	Cash	$3,663
	Sales discount [$3,700 x 1%]	$37
	Accounts receivable [$4,000-$300]		$3,700

In the books of Elsinore Company:

4	Account	Debit	Credit
	Merchandise inventory	$4,000
	Accounts payable		$4,000
	[Purchased inventory on account]
5	Account	Debit	Credit
	Accounts payable	$300
	Merchandise inventory		$300
	[To record purchase returns]
6	Account	Debit	Credit
	Accounts payable	$3,700
	Cash		$3,663
	Merchandise inventory		$37
	[To record cash paid for accounts payable]