Question

On March 1, Dilbert Inc sells 2,000 units to Tundra Inc for $5/unit or a total...

On March 1, Dilbert Inc sells 2,000 units to Tundra Inc for $5/unit or a total of $10,000. Dilbert's cost is $3/unit. On March 10, Tundra requests and receives an allowance of $500 because some of the units are imperfect.

What is Dilbert's journal entry to record the return?

DR: Loss on Defective Merchandise, Sales and Allowances, Inventory, or Accounts Receivable (0, 300, or 500)

CR: Loss on Defective Merchandise, Sales and Allowances, Inventory, or Accounts Receivable (0, 300, or 500)

DR: Loss on Defective Merchandise, Inventory, Costs of Goods Sold, No Entry (0, 300, or 500)

CR: Loss on Defective Merchandise, Inventory, Costs of Goods Sold, No Entry (0, 300, or 500)

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Homework Answers

Answer #1
Notes:
Tundra Receives an allowance of 500
This is not an material return but this is just allowance given by Dilbert Inc to Tundra Inc
Solution:
Journal Entry in the bookds of Dibert's is as below,
Journal Entries
Date Accounts Debit Credit
Mar.10 Sales and Allowances $                          500
         Account Receivable $                            500
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