Question

On March 1, Showcase Co., a furniture wholesaler, sells merchandise to Balboa Co. on account, $259,040, terms n/30. The cost of the merchandise sold is $152,710. On March 5, Showcase Co. issues a credit memo for $31,930 for merchandise returned prior to Balboa Co. paying the original invoice on March 29. The cost of the merchandise returned is $16,530. Journalize Balboa Co.’s entries for (a) the purchase, (b) the return of the merchandise for credit, and (c) the payment of the invoice. Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

Step-by-step explanation:

The journal entries are shown below:

a. Merchandise Inventory A/c $259,040

To Accounts payable A/c $259,040

(Being merchandise purchase on credit is recorded)

b. Accounts payable A/c $31,930

To Merchandise Inventory A/c $31,930

(Being returned goods are recorded)

c. Account payable A/c Dr $227,710 ($259,040 - $31,930)

To Cash A/c $227,710

(Being payment is made with respect to goods purchased)