Question

On June 3, 2017, Pina Company sold to Ann Mount merchandise having a sales price of $8,300 (cost $6,640) with terms of n/60, f.o.b. shipping point. Pina estimates that merchandise with a sales value of $830 will be returned. An invoice totaling $100 was received by Mount on June 8 from Olympic Transport Service for the freight cost. Upon receipt of the goods, on June 8, Mount returned to Pina $300 of merchandise containing flaws. Pina estimates the returned items are expected to be resold at a profit. The freight on the returned merchandise was $24, paid by Pina on June 8. On July 16, the company received a check for the balance due from Mount.

Prepare journal entries for Pina Company to record all the events in June and July.

Answer 1

SOLUTION

Date	Accounts titles and Explanation	Debit ($)	Credit ($)
June 3	Accounts receivable	8,300
	Sales revenue		8,300
	(To record sales)
	Cost of goods sold	6,640
	Merchandise inventory		6,640
	(To record cost of goods sold)
June 8	Sales return and allowance	300
	Accounts receivable		300
	(To record sales return)
	Merchandise inventory	240
	Cost of goods sold (6,640/8,300*300)		240
	(To record cost of goods returned)
June 8	Merchandise inventory	24
	Cash		24
	(To record the freight cost)
July 16	Cash	8,000
	Accounts receivable (8,300-300)		8,000
	(To record receipts)