Question

Longmire & Sons made sales on credit to Alderman Sports totaling $500,000 on April 18. The cost of the goods sold is $400,000. Longmire estimates 3% of its sales to Alderman may be returned. On May 22, $9,000 worth of goods (with a cost of $7,200) are returned by Alderman. Assume Longmire uses a perpetual inventory system. Required: Prepare the related journal entries for Longmire & Sons.

Answer 1

Journal

Date	Account Title and Explanation	Debit	Credit
Apr. 18	Accounts receivable	500,000
	Sales		500,000
	(to record Credit sales)
Apr. 18	Cost of goods sold	400,000
	Merchandising inventory		400,000
	(To record cost of goods sold)
May 22	Merchandising inventory	7,200
	Cost of goods sold		7,200
	(To record goods return)

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