Question

On October 10th, Tiny Tim's Toys sells $2,200 of goods to Kids Toys with terms 3/15, n/45. On October 12th, Kids Toys returned $1,200 (Cost of Goods Sold of $800) to Tiny Tim's Toys. Journalize the entry for Tiny Tim's Toys if Kid's Toys makes payment in full on October 31st.

Answer 1

To record the journal entry for Tiny Tim's Toys when Kid's Toys makes payment in full on October 31st, Tiny Tim's Toys would debit cash and credit accounts receivable for the full amount of $2,000.

Step-by-step explanation:

To journalize the entry for Tiny Tim's Toys when Kid's Toys makes payment in full on October 31st, we need to consider the initial sale, the return, and the subsequent payment. On October 10th, Tiny Tim's Toys would record a debit to accounts receivable for $2,200 and a credit to sales revenue for $2,200. On October 12th, Tiny Tim's Toys would record a debit to sales returns and allowances for $1,200, a debit to cost of goods sold for $800, and a credit to accounts receivable for $2,000. Finally, on October 31st, when Kid's Toys makes payment in full, Tiny Tim's Toys would record a debit to cash for the full amount of $2,000 and a credit to accounts receivable for $2,000.