QUESTION 12
Use the following chart of accounts: Chart of Accounts: Cash (101), Accounts Receivable (102), Merchandise Inventory (103), Equipment (110), Accounts Payable (201), Capital (301), Sales (401), Sales Discounts and Allowances (402), Cost of Goods sold (501), Misc. Expenses (503)
On March 15, Babson returns some of the merchandise, which is not defective. The selling price of the returned merchandise is $600 and the cost of the merchandise returned is $350. Make Klein’s entry(ies) for this transaction.
Clearly explain the accounts and amounts to be debited or credited. This question is eligible for partial credit
| JOURNAL ENTRY | ||||||||||
| DATE | ACCOUNT TITLES | DEBIT | CREDIT | |||||||
| March,15 | Sales | $600 | ||||||||
| Accounts Receivable | $600 | |||||||||
| Merchandise Inventory | $350 | |||||||||
| Cost of Goods Sold | $350 | |||||||||
| Debit to Sales account reducs the Net Sales | ||||||||||
| The Sales amount is reversed | ||||||||||
| Consequently , the amount receivable from Babson is decreased by credit to Accounts Receivable | ||||||||||
| Since the goods are of acceptable quality, the Merchandise Inventory is increased with returned goods | ||||||||||
| Consequently , the cost of goods sold is reduced | ||||||||||
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