Question

Required information [The following information applies to the questions displayed below.] Hair World Inc. is a wholesaler of hair supplies. Hair World uses a perpetual inventory system. The following transactions (summarized) have been selected for analysis: $75,200 900 a. Sold merchandise for cash (cost of merchandise $40,797). b. Received merchandise returned by customers as unsatisfactory (but in perfect condition) for cash refund (original cost of merchandise $540 ). c. Sold merchandise (costing $7,600 ) to a customer on account with terms n/60. d. Collected half of the balance owed by the customer in (c). e. Granted a partial allowance relating to credit sales the customer in (c) had not yet paid. 16,000 8,000 256

Answer 1

Journal entry

No	Account and explanation	Debit	Credit
a	Cash	75200
	Sales revenue		75200
	Cost of goods sold	40797
	Merchandise inventory		40797
b	Sales return and allowance	900
	Cash		900
	Merchandise inventory	540
	Cost of goods sold		540
c	Account receivable	16000
	Sales revenue		16000
	Cost of goods sold	7600
	Merchandise inventory		7600
d	Cash	8000
	Account receivable		8000
e	Sales return and allowance	256
	Account receivable		256