In: Accounting
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.
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) | ||||