Question

v

Customer return and refund

On December 28, Silverman Enterprises sold $18,500 of merchandise to Beasley Co. with terms 2/10, n/30. The cost of the goods sold was $11,200. On December 31, Silverman prepared its adjusting entries, yearly financial statements, and closing entries. On January 3, Silverman issued Beasley a credit memo for returned merchandise. The returned merchandise originally cost Silverman $2,350 and was billed (invoiced) for $4,000 with terms 2/10, n/30.

a. Journalize the entries by Silverman Enterprises to record the December 28 sale. Beasley paid the balance due on January 7.

Dec. 28	Accounts Receivable-Beasley Co.
	Sales
Dec. 28	Cost of Goods Sold
	Inventory

Feedback

Partially correct

b. Journalize the entries by Silverman Enterprises to record the merchandise returned January 3.

Jan. 3	Customer Refunds Payable
	Accounts Receivable-Beasley Co.
Jan. 3	Inventory
	Estimated Returns Inventory

Feedback

Partially correct

c. Journalize the entry to record the receipt of the amount due by Beasley Co. on January 7.

Jan. 7	Cash
	Accounts Receivable-Beasley Co.

Answer 1

Silverman Enterprises

Journal

Date	Account title	Debit	Credit
Dec. 28	Accounts receivable- Beasley Co.	18,500
	Sales		18,500
Dec. 28	Cost of goods sold	11,200
	Inventory		11,200
Jan. 3	Sales returns and allowance	4,000
	Accounts receivable		4,000
Jan. 3	Inventory	2,350
	Cost of goods sold		2,350
Jan. 7	Cash	14,210
	Sales discount	290
	Accounts receivable - Beasley Co.		14,500

Final amount due = Cost of goods purchased - Cost of goods returned

= 18,500 - 4,000

= $14,500

Discount amount = Final amount due x Discount percentage

= 14,500 x 2/100

= $290

Cash payment to be made = Final amount due - Discount amount

= 14,500 - 290

= $14,210

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