Question

On October 5, ABC Company buys merchandise on account from XYZ Hill Company. The selling price of the goods is $5,000, and the cost to XYZ Hill Company is $3,000. On October 8, ABC returns defective goods with a selling price of $900 and a scrap value of $330. Record the transactions in the order presented in the problem on the books of XYZ Hill Company, assuming a perpetual approach. If no entry is required, write "No Entry". Show all your work

Answer 1

Journal Entry ( In the Books of XYZ Hill Co.)

Date	Particulars	Debit	Credit
Oct 5	Accounts receivable Sales ( Being goods sold on account)	5000	5000
Oct 5	Cost of Goods Sold Inventory ( Being COGS recorded)	3000	3000
Oct 8	Sales Return and allowances Accounts Receivable ( Being defective goods sold returned)	900	900
Oct 8	Inventory Cost of Goods sold ( being defective goods added in inventory at scrap value)	330	330