Question

Sales-Related Transactions

Showcase Co., a furniture wholesaler, sells merchandise to Balboa Co. on account, $57,900, terms n/30. The The cost that is reported as an expense when goods is sold.cost of the goods sold is $34,700. Showcase issues a A form used by a seller to inform the buyer of the amount the seller proposes to credit to the account receivable due from the buyer.credit memo for $11,600 for merchandise returned prior to Balboa paying the original invoice. The cost of the merchandise returned is $7,000.

a. Journalize Showcase Co.'s entries for (1) the sale, including (2) the cost of the goods sold.

(1)	Accounts Receivable-Balboa Co. Accounts Payable-Boyle Co. Accounts Receivable-Balboa Co. Cash Cost of Goods Sold Inventory Miscellaneous Expense Sales
	Sales Accounts Payable-Boyle Co. Accounts Receivable-Balboa Co. Cash Cost of Goods Sold Inventory Miscellaneous Expense Sales
(2)	Cost of Goods Sold Accounts Payable-Boyle Co. Accounts Receivable-Balboa Co. Cash Cost of Goods Sold Delivery Expense Inventory Sales Discounts
	Inventory Accounts Payable-Boyle Co. Accounts Receivable-Balboa Co. Cost of Goods Sold Delivery Expense Inventory Miscellaneous Expense Sales Discounts

Feedback

a. Record transactions from the seller's perspective. Keep in mind that two entries are required for the transaction: (1) for the sale on account and (2) for the cost of the merchandise sold (expense) and inventory reduction on the seller's records.

Learning Objective 2.

b. Journalize Showcase Co.'s entries for (1) the credit memo, including (2) the cost of the returned merchandise.

(1)	Customer Refunds Payable Accounts Payable-Boyle Co. Accounts Receivable-Balboa Co. Cash Cost of Goods Sold Customer Refunds Payable Sales Discounts Sales
	Accounts Receivable-Balboa Co. Accounts Payable-Boyle Co. Accounts Receivable-Balboa Co. Delivery Expense Miscellaneous Expense Sales Discounts Sales Returns and Allowances Sales
(2)	Inventory Accounts Payable Cost of Goods Sold Delivery Expense Inventory Miscellaneous Expense Sales Discounts Sales
	Estimated Returns Inventory Cash Cost of Goods Sold Delivery Expense Estimated Returns Inventory Inventory Miscellaneous Expense Sales

Feedback

b. Record the return as two transactions: (1) for the sales return and decrease in Accounts Receivable and (2) for the increase in Inventory and the reduction in Estimated Returns Inventory.

Learning Objective 2.

c. Journalize Showcase Co.'s entry for the receipt of the check for the amount due from Balboa Co.

	Cash Accounts Payable-Boyle Co. Accounts Receivable-Balboa Co. Cash Cost of Goods Sold Miscellaneous Expense Sales Returns and Allowances Sales
	Accounts Receivable-Balboa Co. Accounts Payable-Boyle Co. Accounts Receivable-Balboa Co. Cash Cost of Goods Sold Miscellaneous Expense Sales Discounts Sales

Answer 1