Question

On March 15, Monroe Sales sells $9,525 on account to Garrison Brewer with terms of 2/10, n/30. The cost of goods sold was $6,905.

Required:

(a) Journalize the sale and the recognition of the cost of the sale.*
(b) On March 20, a $125 credit memo is given to Garrison Brewer due to merchandise that was the wrong color. Journalize this event. The cost of the returned merchandise was $65.*
(c) On March 25, Garrison Brewer submits payment in full. Journalize this event.*
.
Journalize the each transactions. Refer to the Chart of Accounts for exact wording of account titles. Round your answers to two decimal places.

Answer 1

To journalize the sale and the recognition of the cost of the sale, you would need to record the accounts receivable, sales revenue, and cost of goods sold. To journalize the credit memo for the returned merchandise, you would need to record the reduction in accounts receivable and sales revenue, and the increase in the cost of goods sold. To journalize the payment in full, you would need to record the payment in the accounts receivable.

Step-by-step explanation:

(a) To journalize the sale and the recognition of the cost of the sale, we need to record the accounts receivable and sales revenue for the sale, as well as the cost of goods sold. The journal entry would be as follows:

Date Account Debit Credit
Mar 15 Accounts Receivable $9,525
Sales Revenue $9,525
Cost of Goods Sold $6,905

(b) To journalize the credit memo given to Garrison Brewer, we need to record the reduction in accounts receivable and sales revenue, as well as the increase in the cost of goods sold. The journal entry would be as follows:

Date Account Debit Credit
Mar 20 Accounts Receivable $125
Sales Revenue $125
Cost of Goods Sold $65

(c) To journalize the payment in full, we need to record the payment in the accounts receivable. The journal entry would be as follows:

Date Account Debit Credit
Mar 25 Cash $9,525
Accounts Receivable $9,525