Question

Two different companies, Ripper and Berners, entered into the following inventory transactions during December. Both companies use a perpetual inventory system. December 3 – Ripper Corporation sold inventory on account to Berners Corp. for $480,000, terms 2/10, n/30. This inventory originally cost Ripper $320,000. December 8 – Berners Corp. returned inventory to Ripper Corporation for a credit of $30,000. Ripper returned this inventory to inventory at its original cost of $20,000. December 12 – Berners Corp. paid Ripper Corporation for the amount owed. Required: Prepare the journal entries to record these transactions on the books of Ripper Corporation

Answer 1

Date	Account title and explanation	Debit	Credit
03-Dec	Accounts Receivable - Berners Corporation	$ 480,000
	Sales revenue		$ 480,000
	(To record sales on account)
03-Dec	Cost of goods sold	$ 320,000
	Inventories		$ 320,000
	(To record the cost of goods sold)
08-Dec	Sales return and allowances	$ 30,000
	Accounts Receivable - Berners Corporation		$ 30,000
	(To record sales return)
08-Dec	Inventories	$ 20,000
	Cost of goods sold		$ 20,000
	(To record goods returned to be taken into inventory)
12-Dec	Cash	$ 441,000
	Sales discount (450,000 x 2%)	$ 9,000
	Accounts Receivable - Berners Corporation (480,000-30,000)		$ 450,000
	(To record collection from customers)