Question

On December 28, 20Y3, Silverman Enterprises sold $19,500 of merchandise to Beasley Co. with terms 2/10, n/30. The cost of the goods sold was $10,600. On December 31, 20Y3, Silverman prepared its adjusting entries, yearly financial statements, and closing entries. On January 3, 20Y4, Silverman Enterprises issued Beasley Co. a credit memo for returned merchandise. The invoice amount of the returned merchandise was $4,500 and the merchandise originally cost Silverman Enterprises $2,200.

a. Journalize the entries by Silverman Enterprises to record the December 28, 20Y3, sale. If an amount box does not require an entry, leave it blank.
b. Journalize the entries by Silverman Enterprises to record the merchandise returned by Beasley Co. on January 3, 20Y4. If an amount box does not require an entry, leave it blank.
c. Journalize the entry to record the receipt of the amount due by Beasley Co. on January 7, 20Y4. If an amount box does not require an entry, leave it blank.

Answer 1

Date Account Title Debit Credit

Dec 28 Accounts Receivable $19,110

Sales $19,110

Cost of Goods sold $10,600

Inventory $10,600

Working:

= 19,500 * ( 1 - 2%)

= $19,110

Date Account Title Debit Credit

Jan 3 Customer refunds payable $4,410

Accounts Receivable $4,410

Inventory $2,200

Estimated return inventory $2,200

Working:

Sales were with 2% discount:

= 4,500 * ( 1 - 2%)

= $4,410

Date Account Title Debit Credit

Jan 7 Cash $15,000

Accounts receivable $14,700

Sales $290

Payment was made after discount period of 10 days so full amount must be paid.

Cash = 19,500 - 4,500 = $15,000

Accounts receivable = 19,110 - 4,410 = $14,700