Question

The following merchandise transactions occurred in December. Both companies use a perpetual inventory system.

Dec.	3		Flounder Ltd. sold goods to Novak Corp. for $70,000, terms n/15, FOB shipping point. The inventory had cost Flounder $37,200. Flounder’s management expected a return rate of 3% based on prior experience.
	7		Shipping costs of $960 were paid by the appropriate company.
	8		Novak returned unwanted merchandise to Flounder. The returned merchandise has a sales price of $2,160, and a cost of $1,160. It was restored to inventory.
	11		Flounder received the balance due from Novak.

Record the above transactions in the books of Flounder. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to the nearest whole dollar, e.g. 5,275.)

Answer 1

Date	Accounts	Debit	Credit
Dec 3	Accounts receivable	70000
	Sales revenue		70000
	Cost of goods sold	37200
	Inventory		37200
	Sales return annd allowances	21000
	Allowance for sales return and allowance (70000*3%)		21000
Dec 7	no entry required
Dec 8	sales return and allowance	2160
	Accounts receivable		2160
	Inventory	1160
	Cost of goods sold		1160

Dec 11	Cash (70000-2160)	67840
	Accounts recereceivable		67840