Question

Cornerstone Exercise 6-21 (Algorithmic) Recording Sales Transactions Mathis Company and Reece Company use the perpetual inventory system. The following transactions occurred during the month of April: a. On April 1, Mathis Company purchased merchandise on account from Reece Company with credit terms of 2/10, n/30. The selling price of the merchandise was $3,500, and the cost of the merchandise sold was $2,450. b. On April 1, Mathis paid freight charges of $100 cash to have the goods delivered to its warehouse. c. On April 8, Mathis returned $1,000 of the merchandise which had originally cost Reece $700. d. On April 10, Mathis paid Reece the balance due. Required: Prepare the journal entries to record these transactions on the books of Reece Company. Assume that Reece uses the net method to record sales on account. For a compound transaction, if an amount box does not require an entry, leave it blank. April 1 (Recorded sale on account) April 1 (Recorded cost of merchandise sold) April 8 (Recorded return of merchandise)

Answer 1

Credit Date General Jounral Apr-01 Accounts Receivable Sales Debit $3,500.00 $3,500.00 (To Record sales) $2,450.00 Apr-01 Cost of goods sold Inventory $2,450.00 (To Record cost of merchandise sold) $ 1,000.00 Apr-08 Sales returns and allowances Accounts receivable $ 1,000.00 (To Record returns) $ 700.00 Apr-08 Inventory Cost of goods sold $ 700.00 (To Record cost of merchandise returned) Apr-10 Cash Accounts Receivable $2,450.00 $2,450.00 (To Record receipt of payment)