Question

In: Accounting

flower garden sells natural supplements to customers with an unconditional right of return if they are...

flower garden sells natural supplements to customers with an unconditional right of return if they are not satisfied. The right of return extends 60 days. On February 10, 2021, a customer purchases $6,000 of products (cost $3,000) on account. Based on its prior experience, flower garden estimates returns will be 15%. On April 5, 2021, the customer returns $400 of merchandise.

Prepare the necessary journal entries to record the transactions on February 10, 2021, and April 5, 2021.

Solutions

Expert Solution

Journal Entries
Sr. No. Date Account Title Debit Credit
1 Feb 10. 2021 Account Receivable $                       6,000
Sales Revenue $                        6,000
(To Record the sales Revenue )
2 Feb 10. 2021 Cost of Goods Sold $                       3,000
         Inventory $                        3,000
(To record the cost of Goods Sold)
3 Feb 10. 2021 Sales Return and Allowances ($ 6000 X 15%) $                          900
           Account Receivable $                            900
(To record the estimation of return)
4 Feb 10. 2021 Returned Inventory $                          400
            Cost of Goods Sold $                            400
(To Record the actual Return)

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