Question

Journalize the following transactions for Cox Company using the gross method of accounting for sales discounts. 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. April 7 Sold goods costing $6,000 to Lopez Company on account, $10,000, terms 4/10, n/30. April 13 Lopez Company was granted an allowance of $1,700 for returned merchandise that was previously purchased on account. The returned goods are in perfect condition. April 18 Received the amount due from Lopez Company.

Answer 1

Journal entry :

Date	accounts & explanation	debit	credit
Apr 7	Account receivable a/c	10000
	Sales a/c		10000
	Cost of goods sold a/c	6000
	Merchandise inventory a/c		6000
	(TO record sales)
Apr 13	Sales return and allowance a/c	1700
	Account receivable a/c		1700
	Merchandise inventory a/c	1020
	Cost of goods sold a/c		1020
	(To record sales return)
Apr 18	Cash a/c	8300
	Account receivable a/c		8300
	(To record cash received)