Question

Prepare journal entries for the transactions described above, using the date of each transaction as its reference. Assume BSS uses perpetual inventory accounts.

On October 1, BSS placed an order for 130 golf shirts at a unit cost of $17, under terms 3/10, n/30. Record the placement of the order for golf shirts

The order placed on October 1 was received by BSS on October 10, but 40 golf shirts had been damaged in shipment. Record the inventory purchased on account.

On October 11, the 40 damaged golf shirts were returned. Record the return of the damaged inventory.

On October 12, BSS complained that the remaining golf shirts were slightly defective so the supplier grated a $130 allowance. Record the allowance received for the defective inventory purchased.

On October 13, BSS paid for the golf shirts. Record the payment in full.

During the first week of October BSS received student and faculty orders for 90 golf shirts, at a unit price of $36.00, on terms 3/10, n/30. The golf shirts were delivered to the customers on October 18. Record the sales revenue on account for the order.

During the first week of October, BSS received student and faculty orders for 90 golf shirts, at a unit price of $36.00, on terms 3/10, n/30. The golf shirts were delivered to these customers on October 18. Record the cost of goods sold for the order.

Customers were unhappy with the golf shirts, so BSS permitted them to be returned or gave an allowance of $16.00 per shirt. On October 21, one-half of the golf shirts were returned by customers. Record the return of the unsatisfactory merchandise sold on account.

Customers were unhappy with the golf shirts, so BSS permitted them to be returned or gave an allowance of $16.00 per shirt. On October 21, one-half of the golf shirts were returned by customers. Record the cost of goods returned.

Customers were unhappy with the golf shirts, so BSS permitted them to be returned or gave an allowance of $16.00 per shirt. On October 22, the remaining 45 customers were granted the allowance. Record the allowance granted for the defective inventory sold on account.

On October 25, the customers paid their remaining balances due on account. Record the customers' payments in full.

So far, I have all of the journal entries correct but cannot figure out what the last one should be.

Answer 1

On Oct 18, 90 Golf shirts were sold at a price of $36. Hence sales revenue is booked for (90 x $36) $3240.

On Oct 21, 45 Golf shirts were returned so customers balance get reduced by (45 x $36) $1620.

On Oct 22, allowance for 45 Golf shirts were granted to customers, hence customers balance further gets reduced by (45 x $16) $720.

Remaining balance payable by customers = $3240 - 1620 - 720 = $900

Journal entry

Date	Account Name	Debit	Credit
Oct 25	Cash	$900
	Accounts receivable		$900
	(To record receipt of remaining balance from customers on account)