Question

(Sales with Returns) On June 3, 2020, Hunt Company sold to Ann Mount merchandise having a sales price of $8,000 (cost $6,000) with terms of n/60, f.o.b. shipping point. Hunt estimates that merchandise with a sales value of $800 will be returned. An invoice totaling $120 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 Hunt $300 of merchandise containing flaws. Hunt estimates the returned items are expected to be resold at a profit. The freight on the returned merchandise was $24, paid by Hunt on June 8. On July 16, the company received a check for the balance due from Mount.

Prepare journal entries for Hunt Company to record all the events in June and July.

Answer 1

Solution:

Date	Account Titles and Explanation	Debit	Credit
June. 3	Account Receivable	$      8,000
	Sales Revenue		$        8,000
	(To record credit sales)
June. 3	Cost Of Goods Sold	$      6,000
	Inventory		$        6,000
	( To record Cost of goods sold)
June. 8	Sales return and allowance	$          300
	Account Receivable		$           300
	(To record sales returns)
June. 8	Inventory [300*75%]	$          225
	Cost Of Goods Sold		$           225
	( To record Cost of goods sold)
June. 8	Freight [Expense]	$            24
	Cash		$              24
	( To record freight paid)
July. 16	Cash	$      7,700
	Accounts Receivables		$        7,700
	( To record collection of accounts receiovables)