Question

will pay within the discom Juul til alle believes that all companies thin the discount period. Additionally, Carrie allows a 90-day return nrivilege for hany, came allows a 90-day return privilege for the mer- dise it sells. At year-end, Carrie estimates sales of $1,200,000 (with a cost to Ca are still within the 90-day return period. From past experience, 6 percent of this merchan- enected to be returned. Prepare the period-end adjusting journal entries needed for Carrie to comply with the revenue recognition standard. Carrie Corporation's fiscal year-end is remain that are still within the 90-0 Corporation to comply with the res December 31. PROBLEMS-SET A LO2, 3 Journal Entries for Merchandise Transactions on Seller's and Buyer's Books-Perpetual System The following transactions occurred between the Decker Company and Mann Stores, Inc., during March: Mar. 8 Decker sold $14,000 worth of merchandise ($9,600 cost) to Mann Stores with terms of 2/10, n/30. 10 Mann Stores paid freight charges on the shipment from Decker Company, $500. 12 Mann Stores returned $2,000 of the merchandise ($1,600 cost) shipped on March 8. 17 Decker received full payment for the net amount due from the March 8 sale. 20 Mann Stores returned goods that had been billed originally at $800 ($600 cost). Decker issued a check for $784.

Answer 1

In the books of Decker:

Date	Account title and explanation	Debit	Credit
Mar. 8	Accounts receivable	$14,000
	Sales revenue		$14,000
	[Sales on account]
	Cost of goods sold	$9,600
	Merchandise inventory		$9,600
	[Cost of goods sold]
Mar. 10	No Entry
Mar. 12	Sales returns and allowance	$2,000
	Accounts receivable		$2,000
	[Sales returns]
	Merchandise inventory	$1,600
	Cost of goods sold		$1,600
	[Cost of sales returns]
Mar. 17	Cash	$11,760
	Sales discount [12,000 x 2%]	$240
	Accounts receivable [14,000-2,000]		$12,000
	[Collections from customers]
Mar. 20	Sales returns and allowance	$800
	Cash		$800
	[Sales returns]
	Merchandise inventory	$600
	Cost of goods sold		$600
	[Cost of sales returns]

In the books of Mann Stores:

Date	Account title and explanation	Debit	Credit
Mar. 8	Merchandise inventory	$14,000
	Accounts payable		$14,000
	[Purchases on account]
Mar. 10	Merchandise inventory	$500
	Cash		$500
	[Paid for freight]
Mar. 12	Accounts payable	$2,000
	Merchandise inventory		$2,000
	[Purchase returns]
Mar. 17	Accounts payable [14,000-2,000]	$12,000
	Cash		$11,760
	Merchandise inventory (12,000 x 2%)		$240
	[Paid for accounts payable]
Mar. 20	Cash	$800
	Merchandise inventory		$800
	[Purchase returns]