Question

Journal Entries for Merchandise Transactions on Seller's and Buyer's Books—Perpetual System The following are selected transactions for Kim, Inc., during the month of June: June 21 Sold and shipped on account to Lowery Company, $4,000 ($2,000 cost) of merchandise, with terms of 2/10, n/30. 28 Lowery Company returned defective merchandise billed at $400 on June 21 ($200 cost.) 30 Received from Lowery Company a check for full settlement of the June 21 transaction. Required Prepare the necessary journal entries for (a) Kim, Inc., and (b) Lowery Company. Both companies use the perpetual inventory system. Seller's Journal Entries Buyer's Journal Entries KIM, INC. GENERAL JOURNAL Description Debit Credit Date June 21 Sold merchandise to Lowery Company terms 2/10, n/30. Cost of merchandise sold to Lowery Company. Merchandise returned by Lowery Company. 28 Cost of merchandise returned by Lowery Company 30 Sales Discounts Received amount due from Lowery Company Please answer all parts of the question.

Answer 1

Journal entry

Date	General Journal	Debit	Credit
June 21	Account receivable	4000
	Sales revenue		4000
	(To record sales)
June 21	Cost of merchandise sold	2000
	Merchandise inventory		2000
	(To record cost of goods sold)
June 28	Sales return and allowance	400
	Account receivable		400
	(To record sales return)
June 28	Merchandise inventory	200
	Cost of merchandise sold		200
	(To record cost of goods returned)
June 30	Cash (3600*98%)	3528
	Sales discount	72
	Account receivable		3600
	(To record collection)