Question

Perpetual Inventory Return 3. Porter Morse returned $275 (selling price) of merchandise purchased on account to Labrie Co. The cost of the merchandise to Labrie Co. is $100. What would be the journal entries on the books of both the buyer and seller? Perpetual Inventory Freight 4 Capris Co. paid the cost of freight, $70. Journalize the transaction. Assume that Capris Co. is the buyer.

Answer 1

3.

In the books of Porter Morse

Sr No	Particulars	Dr ($)	Cr($)
1	Accounts Payable A/c	275
	Inventory		275
	(Being goods returned by Porter Morse to Labrie Co)

In the books of Labrie Co

Sr. No	Particulars	Dr($)	Cr($)
1	Sales Return A/c	275
	Accounts Receivable		275
	(Goods returned by Porter Morse)
2	Inventory A/c	100
	Cost of goods sold		100
	(Cost of goods returned)

4. Journal Entry for freight paid by Capris Co.

The freight paid by Capris Co is added to the inventory cost.

Sr No	Particulars	Dr($)	Cr($)
1	Inventory A/c	70
	Cash A/c		70
	(Freight paid)