Question

After the amount due on a sale of $25,700, terms 1/10, 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 $15,420.

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. If an amount box does not require an entry, leave it blank.

(a)
(b)

Answer 1

1/10 means if customer pay amount within 10 days of sales , seller will give him a discount of 1% on the amount.

refund amount owed to the customer is the amount paid by the customer. The customer has paid the amount in the discounting period and due to this he got 1% discount on the amount he paid.

Answer of PART A

Refund amount = total amount - discount

Refund amount = $25,700 - (1% of $25,700)

Refund amount = $25,700 - $257

Refund amount = $25,443

Answer of PART B

Account	Debit	credit
Sales return and allowance	$25,700
To sales discount (1% of 25,700)		$257
To cash		$25,443
Merchandise inventory	$15,420
To cost of merchandise sold		$15,420

Below down i am showing the entry done to book the sales. (not a part of answer)

Account	Debit	credit
Cash a/c	$25,443
Sales discount	$257
To sales		$25,700