Question

On June 3, 2017, Sarasota Company sold to Ann Mount merchandise having a sales price of $8,000 (cost $5,600) with terms of n/60, f.o.b. shipping point. Sarasota estimates that merchandise with a sales value of $800 will be returned. An invoice totaling $120 was received by Mount on June 8 from Olympic Transport Service for the freight cost. Upon receipt of the goods, on June 8, Mount returned to Sarasota $200 of merchandise containing flaws. Sarasota estimates the returned items are expected to be resold at a profit. The freight on the returned merchandise was $26, paid by Sarasota on June 8. On July 16, the company received a check for the balance due from Mount.

Prepare journal entries for Sarasota Company to record all the events in June and July.

Answer 1

Date	General Journal	Debit	Credit
June 3, 2017	Accounts Receivables	$8,000
	Sales Revenue		$8,000
	Cost of Goods Sold	$5,600
	Inventory		$5,600
June 8, 2017	Sales return and Allowances	$200
	Accounts Receivables		$200
	Inventory (5600/8000*200)	$140
	Cost of Goods Sold		$140
June 8, 2017	Freight Expense	$26
	Cash		$26
July 16, 2017	Cash	$7,800
	Accounts Receivables (8000-200)		$7,800