Question

On July 2, 2021, Concord Company sold to Sue Black merchandise having a sales price of $10,800 (cost $6,480) with terms of 2/10. n/30. f.o.b. shipping point. Concord estimates that merchandise with a sales value of $630 will be returned. An invoice totaling $110, terms n/30, was received by Black on July 6 from Pacific Delivery Service for the freight cost. Upon receipt of the goods, on July 3, Black notified Concord that $350 of merchandise contained flaws. The same day, Concord issued a credit memo covering the defective merchandise and asked that it be returned at Concord’s expense. Concord estimates the returned items to have a fair value of $130. The freight on the returned merchandise was $30 paid by Concord on July 7. On July 12, the company received a check for the balance due from Black.

Prepare journal entries for Concord Company to record all the events noted above assuming sales and receivables are entered at gross selling price. (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. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit July 2July 3July 7July 12 (To record sales and sales return at sale price) July 2July 3July 7July 12 (To record sales return at cost price) July 2July 3July 7July 12 (To record cost of merchandise which contained flaws) July 2July 3July 7July 12 (To record sales return at fair value) July 2July 3July 7July 12 July 2July 3July 7July 12

Prepare the journal entry assuming that Sue Black did not remit payment until August 5. (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.) Account Titles and Explanation Debit Credit

Answer 1

Answer
a
Date	Title	Debit $	Credit $
02-Jul	Accounts Receivable	$     10,800
	Allowance for Sales Returns		$          630
	Sales Revenue		$     10,170
02-Jul	Estimated Inventory Returns .	$          378		6480/10800*630
	Cost of Goods Sold	$       6,102
	Inventory		$       6,480
03-Jul	Allowance for Sales Returns .	$          350
	Accounts Receivable		$          350
03-Jul	Returned Inventory	$          130
	Estimated Inventory Returns		$          130
07-Jul	Delivery Expense	$            30
	Cash		$            30
12-Jul	Cash	$     10,241
	Sales Discounts	$          209		10450*2%
	Accounts Receivable		$     10,450	10800-350
b)	There can be two treatments for this
	either No separate entry is passed and amount is left as such in Accounts Receivable
	or an entry can be passed to transfer amount overde to Notes Receivable Account
Date	Title	Debit $	Credit $
	Notes Receivable	$     10,450
	Accounts Receivable		$     10,450