Question

On October 5, Metlock Company buys merchandise on account from Ivanhoe Company. The selling price of the goods is $5,240, and the cost to Ivanhoe Company is $3,180. On October 8, Metlock returned defective goods with a selling price of $640 and a scrap value of $310. Record the transactions of Metlock Company, assuming a perpetual approach.

Answer 1

The answer is given below;

Step-by-step explanation:

Inventory Dr.$5,240

Accounts Payable-Ivanhole Cr.$5,240

Accounts Payable-Ivanhole Dr.$640

Inventory Cr.$640

The scrap value given is irrelevant as the metlock will set off the account payable of ivanhole as the goods are returned to him.