Question

Journalize the following transactions for Hernandez Company. Assume a perpetual inventory system. Also, assume a constant gross profit ratio for all items sold. Make sure to enter the day for each separate transaction.

July 2 Sold goods costing $3,000 to Edwards Company for cash, $5,000.
July 8 Edwards Company returned undamaged merchandise, purchased on July 2, for a cash refund, $290.

Answer 1

July 2

Dr Cash $5,000

Cr Sales Revenue$5,000

July 2

Dr Cost of goods sold $3,000

Cr Merchandise inventory$3,000

July 8

Dr Sales returns and allowance $290

Cr Cash $290

July 8

Dr Merchandise inventory $174

Cr Cost of goods sold $174

Step-by-step explanation:

Preparation of the journal entries for Hernandez Company

July 2

Dr Cash $5,000

Cr Sales Revenue$5,000

July 2

Dr Cost of goods sold $3,000

Cr Merchandise inventory$3,000

July 8

Dr Sales returns and allowance $290

Cr Cash $290

July 8

Dr Merchandise inventory ($3,000*$290 / $5,000) $174

Cr Cost of goods sold $174