Question

On June 10, Carla Vista Company purchased $8,000 of merchandise on account from Flint Company, FOB shipping point, terms 1/10, n/30. Carla Vista pays the freight costs of $550 on June 11. Damaged goods totaling $400 are returned to Flint for credit on June 12. The fair value of these goods is $70. On June 19, Carla Vista pays Flint Company in full, less the purchase discount. Both companies use a perpetual inventory system.

Prepare separate entries for each transaction for Flint Company. The merchandise purchased by Carla Vista on June 10 had cost Flint $4,600.

Answer 1

Journal entry

Date	account and explanation	Debit	Credit
June 10	Account receivable	8000
	Sales revenue		8000
	(To record sales)
	Cost of goods sold	4600
	Merchandise inventory		4600
	(To record cost of goods sold)
June 12	Sales return and allowance	400
	Account receivable		400
	(To record sales return)
	Merchandise inventory	70
	Cost of goods sold		70
	(To record cost of goods returned)
June 19	Cash (7600*99%)	7524
	Sales discount	76
	Account receivable (8000-400)		7600