Question

On Jan. 3, Gourmet Cakes sold $15,000 of merchandise on account to Jerry Hines. On Jan. 10, Jerry returned $2,000 of the merchandise because they bought too much. Assuming the cost of the returned merchandise to Gourmet Cakes was $500 and they use a perpetual inventory system, the journal entry on Jan. 10, to record the return of the merchandise from Jerry Hines, would be:

Answer 1

sales returns & allowance 2,000 debit

accounts receivables 2,000 credit

Inventory 500 debit

COGS 500 credit

-to record the return of goods from Jerry Hines--

Step-by-step explanation:

As the returned goods are not reported as failure or malfunction just; the customer returned as exceeds his needs, we can return them to goods ready to sale thus; inside inventory account.

We will decrease the account receivable, our COGS and increase our inventory