Question

Exercise 18-19 On June 3, 2020, Teal Company sold to Ann Mount merchandise having a sales price of $8,700 (cost $7,830) with terms of n/60, f.o.b. shipping point. Teal estimates that merchandise with a sales value of $870 will be returned. An invoice totaling $100 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 Teal $400 of merchandise containing flaws. Teal estimates the returned items are expected to be resold at a profit. The freight on the returned merchandise was $23, paid by Teal on June 8. On July 16, the company received a check for the balance due from Mount.

Prepare journal entries for Teal 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.)

Answer 1

Journal entry
Date	Account	Debit $	Credit $
June 3,2020	Ann Mount	8,700
	Sales ( 8,700 - 870 )		7,830
	Return liability		870
	(To record sales)
June 3,2020	Cost of Goods sold	7,830
	Merchandise inventory		7,830
	(To record Cost of Goods sold)
June 8,2020	No Entry	0	0
June 8,2020	Return liability	870
	Ann Mount		400
	Sales		470
	(To record sales returns)
June 8,2020	Merchandise inventory	360
	Cost of Goods sold		360
	( 7,830 / 8,700 ) x 400
	(To record Cost of Goods returns)
June 8,2020	Freight Outwards	23
	Cash		23
	(To record Freight Outwards)
June 16,2020	Cash	8,300
	Ann Mount		8,300
	(To record amount received)
	(8,700 - 400 )