Question

Sales-Related Transactions

After the amount due on a sale of $23,900, terms 2/10, n/eom, is received from a customer within the discount period, the seller consents to the return of the entire shipment for a cash refund. The cost of the merchandise returned is $14,340.

a. What is the amount of the refund owed to the customer?
$

b. Journalize the entries made by the seller to record the return and the refund.

(a)
(b)

Answer 1

(a) The amount of the refund owed to the customer

                        =          $ 23900 x 98%         =          $ 23,422

(b) Journal Entries to be made by the seller to record the return and the refund.

Sales Returns & Allowances          A/c      Dr        $ 23,900

To Sales Discounts A/c                  Cr                                $ 478

To Cash          A/c Cr                                $ 23,422

( to record the return and refund customer's payment)

Inventory       A/c                                          Dr        $ 14,340

To Cost Of Sales       A/c Cr $ 14,340

(to return the returned shipment to inventory)