Question

Entity C sold Entity F $9,000 of merchandise. Terms are n/20, net 30. Entity C paid $4,500 for all of the merchandise.

1) Journalize the sale on Entity C books

2) If entity F returned $2,000 of the merchandise purchased and paid for the remaining balance within 8 days from the date, how much did entity F remit to Entity C

3) What was the journal entry made by Entity C for the return

Answer 1

1)In books of entity C

Date	Account title	Debit	credit
	Accounts receivable	9000
	sales revenue		9000
	[sales made on account]
	cost of goods sold	4500
	Merchandise inventory		4500
	[cost of sales recorded]

2)

Amount remitted by entity F = 9000 - 2000 = 7000

3)

Date	Account title	Debit	credit
	Sales return and allowance	2000
	Accounts receivable		2000
	[being return made]
	Merchandise inventory	1000
	cost of goods sold		1000
	[Being cost of inventory returned reinstated 4500*2000/9000]