Question

Sales-Related Transactions

Showcase Co., a furniture wholesaler, sells merchandise to Balboa Co. on account, $47,500, terms n/30. The cost of the goods sold is $28,500. Showcase issues a credit memofor $9,500 for merchandise returned prior to Balboa paying the original invoice. The cost of the merchandise returned is $5,700.

a. Journalize Showcase Co.'s entries for (1) the sale, including (2) the cost of the goods sold.

(1)
(2)

b. Journalize Showcase Co.'s entries for (1) the credit memo, including (2) the cost of the returned merchandise.

(1)
(2)

c. Journalize Showcase Co.'s entry for the receipt of the check for the amount due from Balboa Co.

Answer 1

	Account Description	Debit	Credit
a	Balboa Co.	47,500.00
	Sales Revenue		47,500.00
	(Being Sales Recorded)
	Cost of Goods Sold	28,500.00
	Inventory		28,500.00
	(Being Transferred to Cost from Inventory)
b
	Sales Return	9,500.00
	Balboa Co.		9,500.00
	(Being Goods returned)
	Inventory	5,700.00
	Cost of Goods Sold		5,700.00
	(Being Returned Goods taken into inventory)
c	Cash	38,000.00
	Balboa Co.		38,000.00
	(Being cash received on Account)

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