Question

Concord Ltd. and Riverbed Ltd. incurred the following merchandise transactions in June. June 10 Concord sold $4,400 of merchandise to Riverbed, terms 1/10, n/30, FOB shipping point. The merchandise cost Duvall $2,640 when it was originally purchased. 11 Freight costs of $190 were paid by the appropriate company. 12 Concord received damaged goods returned by Riverbed for credit. The goods were originally sold for $700; the cost of the returned merchandise was $420. The merchandise was not returned to inventory. 19 Concord received full payment from Riverbed.

Prepare journal entries for each transaction in the books of Concord Ltd., assuming (1) a perpetual inventory system is used, and (2) a periodic inventory system is used.

Answer 1

Perpetual inventory system

Date	account and explanation	debit	credit
June 10	Account receivable	4400
	Sales revenue		4400
	(To record sales)
	Cost of goods sold	2640
	Merchandise inventory		2640
	(To record cost of goods sold)
June 12	Sales return and allowance	700
	Account receivable		700
	(To record sales return)
	Merchandise inventory	420
	Cost of goods sold		420
	(To record cost of goods returned)
June 19	Cash (3700*99%)	3663
	Sales discount	37
	Account receivable		3700
	(To record amount received)

Periodic inventory system

Date	account and explanation	debit	credit
June 10	Account receivable	4400
	Sales revenue		4400
	(To record sales)
June 12	Sales return and allowance	700
	Account receivable		700
	(To record sales return)
June 19	Cash (3700*99%)	3663
	Sales discount	37
	Account receivable		3700
	(To record amount received)