Question

Exercise 207

Prepare the necessary journal entries to record the following transactions, assuming Oldman Company uses a perpetual inventory system.

(a) Oldman sells $ 54,000 of merchandise, terms 1 / 10, n / 30. The merchandise cost $ 30,000.

(b) The customer in (a) returned $ 5,000 of merchandise to Oldman. The merchandise returned cost $ 3,500.

(c) Oldman received the balance due within the discount period.

Answer 1

(a)	Accounts receivable		54000
		To Sales		54000
	(Being oldman sells $54000 of mechandise)
	Cost of goods sold		30000
		To Inventory		30000
	(Being mechandise cost of goods sold recorded)
(b)	Sales return		5000
		To Account receivable		5000
	(Being mechandise return amounting to $5000 )
	Inventory		3000
		To cost of goods sold		3000
	(Being mechandise return cost of goods sold $3000 )
(c)	Cash A/c		44100
		To Sales discount	4900
		To Accounts receivable		49000
	(Being payment received after 1% discount on sale of (54000-5000))