Question

Sales-Related Transactions Showcase Co., a furniture wholesaler, sells merchandise to Balboa Co. on account, $63,700, terms n/30. The cost of the goods sold is $38,200. Showcase issues a credit memo for $12,700 for merchandise returned prior to Balboa paying the original invoice. The cost of the merchandise returned is $7,600. 

a. Journalize Showcase Co.'s entries for (1) the sale, including (2) the cost of the goods sold. (1) (2) 

b. Journalize Showcase Co.'s entries for (1) the credit memo, including (2) thee cost of the returned merchandise. (1) (2) 

c. Journalize Showcase Co.'s entry for the receipt of the check for the amount due from Balboa Co. 

Answer 1

a)

1) Accounts receivable account..debit $63,700

To Sales revenue account.....Credit $63,700

2) Cost of merchandise sold a/c..debit $38,200

To Merchandise Inventory a/c...Credit $38,200

b)

1) customer refunds payable account..debit $12,700

To Accounts receivable account......credit $12,700

2) Merchandise Inventory account......Debit $7,600

Estimated returns Inventory a/c.......Credit $7,600

c)

Cash account...............Debit $51,000 (63,700 - $12,700)

To Accounts receivable a/c. credit $51,000