When merchandise previously sold to a customer is returned, the journal entry is ...

Expert Solution

Transition	General Journal	Debit	Credit
1a	Sales returns	$xxxxx*
	Accounts receivable		$xxxxx
	(Sales return recorded)

1b	Merchandise Inventory	$xxxxx
	Cost of Goods sold		$xxxxx
	(Cost of goods sold reduced by goods returned)

xxxxx represent $amounts of sales return and merchandise return.

When goods are returned an adjustment entry is also passed to add back the Merchandise inventory received on sales return and reduce the cost of goods sold with the amount of inventory returned.

Journal entry in case of Sales return is for a cash sales

Transition	General Journal	Debit	Credit
1a	Sales returns	$xxxxx*
	Cash		$xxxxx
	(Sales return recorded)

1b	Merchandise Inventory	$xxxxx
	Cost of Goods sold		$xxxxx
	(Cost of goods sold reduced by goods returned)

*xxxxx represent $amounts of sales return and merchandise return.

ekkarill92 answered 1 year ago

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