Question

Sales Transactions

Journalize the following merchandise transactions:

a. Sold merchandise on account, $20,700 with terms 1/10, n/30. The cost of the goods sold was $12,420.

Sale	Accounts Receivable Accounts Payable Accounts Receivable Cash Cost of Merchandise Sold Merchandise Inventory Miscellaneous Expense Purchases Purchases Discounts Purchases Returns and Allowances Sales Discounts Sales Returns and Allowances Sales
	Sales Accounts Payable Accounts Receivable Cash Cost of Merchandise Sold Purchases Discounts Purchases Returns and Allowances Purchases Sales Sales Discounts Sales Returns and Allowances
Cost	Cost of Goods Sold Accounts Payable Accounts Receivable Cash Cost of Goods Sold Merchandise Inventory Miscellaneous Expense Purchases Purchases Discounts Purchases Returns and Allowances Sales Sales Discounts
	Inventory Accounts Payable Accounts Receivable Cash Cost of Merchandise Sold Inventory Miscellaneous Expense Purchases Purchases Discounts Purchases Returns and Allowances Sales Sales Discounts Sales Returns and Allowances

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(a) When the perpetual inventory system is used, two entries are recorded each time a sale is made. In the first entry, accounts receivable and the sale are recorded, less the discount. A second entry records the cost of the merchandise sold and the reduction of inventory on hand.

Learning Objective 2.

b. Received payment less the discount.

	Cash Accounts Payable Accounts Receivable Cash Cost of Merchandise Sold Merchandise Inventory Miscellaneous Expense Purchases Purchases Discounts Purchases Returns and Allowances Sales Sales Returns and Allowances
	Accounts Receivable Accounts Payable Accounts Receivable Cash Cost of Merchandise Sold Merchandise Inventory Miscellaneous Expense Purchases Purchases Discounts Purchases Returns and Allowances

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(b) The exercise assumes the invoice will be paid within the discount period, so the seller records the sale at the discounted amount.

Learning Objective 2.

c. Refunded $230 to customer for defective merchandise that was not returned.

	Customer Refunds Payable Accounts Payable Accounts Receivable Cash Customer Refunds Payable Merchandise Inventory Miscellaneous Expense Purchases Purchases Discounts Purchases Returns and Allowances Sales Sales Returns and Allowances
	Cash Accounts Payable Accounts Receivable Cash Customer Refunds Payable Merchandise Inventory Miscellaneous Expense Purchases Purchases Discounts Purchases Returns and Allowances Sales Sales Returns and Allowances

Answer 1

a	Accounts Receivable	Debit	20,493
	Discount	Debit	207
	Sales	Credit		20,700
	Cost of Merchandise Sold	Debit	12,420
	Merchandise Inventory	Credit		12,420

b	Cash	Debit	20493
	Accounts Receivable	Credit		20493

c	Sales Returns	Debit	230
	Accounts Receivable	Credit		230