Question

On March 12, Klein Company, Inc. sold merchandise in the amount of $7,800 to Babson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,500. Klein uses the perpetual inventory system. On March 15, Babson returns some of the merchandise. The selling price of the returned merchandise is $600 and the cost of the merchandise returned is $350. The entry or entries that Klein must make on March 15 is:

Answer 1

Date Account Title Debit Credit

March 15, Sales returns and allowances $600

Accounts Receivable $600

Merchandise Inventory $350

Cost of Goods Sold $350