Question

Blue Barns sold 136 gallons of paint at $31 per gallon on July 6 to a customer with a cost of $19 per gallon to Blue Barns. Terms of the sale are 2/15, n/45, invoice dated July 6. The customer pays their account in full on July 24. On July 28, the customer discovers 17 gallons are the wrong color and returns the paint for a full cash refund. Blue Barns returns the gallons to their inventory at the original cost per gallon. Record the journal entries to recognize these transactions for Blue Barns.

Answer 1

		Debit	Credit
Jul-06	Accounts Receivable (136 x 31)	4,216.00
	Sales		4,216.00
Jul-06	Cost of Goods Sold (136 x 19)	2,584.00
	Merchandise Inventory		2,584.00
Jul-24	Cash	4,131.68
	Sales Discounts	84.32
	Accounts Receivable		4,216.00
Jul-28	Sales Returns and allowances	516.46
	Accounts Receivable		516.46
Jul-28	Merchandise Inventory	323.00
	Cost of Goods sold		323.00
Jul-28	Accounts Receivable	516.46
	Cash		516.46