Question

Customer return and refund 

On December 28, 20Y3, Silverman Enterprises sold $19,500 of merchandise to Beasley Co. with terms 2/10, n/30. The cost of the goods sold was $11,600. On December 31, 20Y3, Silverman prepared its adjusting entries, yearly financial statements, and closing entries. On January 3, 2014, Silverman Enterprises issued Beasley Co. a credit memo for returned merchandise. The invoice amount of the returned merchandise was $4,500 and the merchandise originally cost Silverman Enterprises $2,200. 

a. Journalize the entries by Silverman Enterprises to record the December 28, 20Y3 sale, using the net method under a perpetual inventory system. If an amount box does not require an entry, leave it blank. 

b. Journalize the entries by Silverman Enterprises to record the merchandise returned by Beasley Co. on January 3, 20Y4. If an amount box does not require an entry, leave it blank. 

c. Journalize the entry to record the receipt of the amount due by Beasley Co. on January 7, 20Y4. If an amount box does not require an entry, leave it blank. 

Answer 1

a.

Journal

Date	Account Title and Explanation	Debit	Credit
Dec. 28, 20Y3	Account receivable - Beasley co.	19,500
	Sales		19,500
Dec. 28, 20Y3	Cost of goods sold	11,600
	Inventory		11,600

b.

Journal

Date	Account Title and Explanation	Debit	Credit
Jan. 3, 20Y4	Sales return and allowance	4,500
	Account receivable - Beasley co.		4,500
Jan. 3, 20Y4	Inventory	2,200
	Cost of goods sold		2,200

c.

Journal

Date	Account Title and Explanation	Debit	Credit
Jan. 7, 20Y4	Cash	14,700
	Sales discount	300
	Account receivable - Beasley co.		15,000

Final amount due = Sales - sales return

= 19,500 - 4,500

= $15,000

Discount amount = Final amount due x Discount percentage

= 15,000 x 2/100

= $300

Cash received = Final amount due - Discount amount

= 15,000 - 300

= $14,700

kindly give a positive rating if you are satisfied with the solution. Please ask if you have any query related to the question, Thanks.