Question

On June 10, Carla Vista Company purchased $8,000 of merchandise on account from Flint Company, FOB shipping point, terms 1/10, n/30. Carla Vista pays the freight costs of $550 on June 11. Damaged goods totaling $400 are returned to Flint for credit on June 12. The fair value of these goods is $70. On June 19, Carla Vista pays Flint Company in full, less the purchase discount. Both companies use a perpetual inventory system.Prepare separate entries for each transaction for Flint Company. The merchandise purchased by Carla Vista on June 10 had cost Flint $4,600.

Answer 1

Answer: Preparation of journal entries for Flint company:
Date	Account Titles and Explanation	Debit (in $)	Credit (in $)
Jun-10	Accounts Receivable	$8,000
	Sales revenue		$8,000
	(To record the sale of merchandise on account)
Jun-10	Cost of goods sold	$4,600
	Inventory		$4,600
	(To record the cost of goods sold)
Jun-11	No entry	-
	No entry		-
Jun-12	Sales return and Allowances	$400
	Accounts Receivable		$400
	(To record the sales return)
Jun-19	Cash	$7,524
	Discount on Sales ($8,000 (-) $400) x 1%)	$76
	Accounts Receivable         ($8,000 (-) $400)		$7,600
	(To record the discount availed and payment)