Question

Exercise 18-19 On June 3, 2017, Martinez Company sold to Ann Mount merchandise having a sales price of $8,700 (cost $6,090) with terms of n/60, f.o.b. shipping point. Martinez estimates that merchandise with a sales value of $870 will be returned. An invoice totaling $110 was received by Mount on June 8 from Olympic Transport Service for the freight cost. Upon receipt of the goods, on June 8, Mount returned to Martinez $300 of merchandise containing flaws. Martinez estimates the returned items are expected to be resold at a profit. The freight on the returned merchandise was $23, paid by Martinez on June 8. On July 16, the company received a check for the balance due from Mount. Prepare journal entries for Martinez Company to record all the events in June and July. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit (To record sales) (To record cost of goods sold) (To record sales returns) (To record cost of goods returned) (To record the freight cost) Click if you would like to Show Work for this question: Open Show Work

Answer 1

Date	General Journal	Debit	Credit
June 3, 2017	Account receivable	8,700
	Refund Liability		870
	Sales revenue		7,830
	(To record sales revenue.) (Refund Liabilty portion of sales = 870/8700 = 10%)
June 3, 2017	Cost of goods sold	5,481
	Estimated Return Inventory (6090*10%)	609
	Inventory		6,090
	(To record cost of goods sold.)
June 8, 2017	Refund Liability	300
	Account receivable		300
	(To record sales returns)
June 8, 2017	Returned Inventory	110
	Estimated Return Inventory		110
	(To record cost of goods returned)
June 8, 2017	Delivery Expense	23
	Cash		23
	(TO record Delievery Cost.)
July 16, 2017	Cash	8400
	Account receivable		8400
	(To record Cash collection from customer.) (8700-300)