Question

5. Merchandise with a list price of $3,800 and costing $2,000 is sold on account, subject to the following terms: FOB shipping point, 2/10, n/30. The seller prepays the $50 shipping charges and bills the customer, (seller pays Cash). Prior to payment for the goods, the seller issues a credit memorandum for $800 to the customer for merchandise costing $500 that is returned. The correct amount is received within the discount period. Record the foregoing transactions of the seller in the sequence indicated below. Sold the merchandise, recognizing the sale and cost of merchandise sold (a) (b) Paid the transportation charges. Issued the credit memorandum. (c) (d) Received payment from the customer. Credit Debit Post Ref Description Date

Answer 1

Date	Particulars			Debit	Credit
a)	Accounts Receivable			$ 3,800.00
	To Sales Revenue				$ 3,800.00
	Cost of Goods Sold			$ 2,000.00
	To Finished Goods Inventory				$ 2,000.00
b)	Delivery Expense			$      50.00
	To Cash				$      50.00
c)	Sales Revenue			$    800.00
	To Accounts Receivable				$    800.00
	Finished Goods Inventory			$    500.00
	To Cost of Goods Sold				$    500.00
d)	Cash			$ 2,940.00		($ 3000 - $ 60)
	Sales Discounts			$      60.00		($ 3000 x 2%)
	To Accounts Receivable				$ 3,000.00	($ 3800 - $ 800)