Question

On June 3, 2017, Pina Company sold to Ann Mount merchandise having a sales price of...

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.

Homework Answers

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)
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