On June 3, 2017, Flint Company sold to Ann Mount merchandise having a sales pric
ID: 2331497 • Letter: O
Question
On June 3, 2017, Flint Company sold to Ann Mount merchandise having a sales price of $8,400 (cost $5,880) with terms of n/60, f.o.b. shipping point. Flint estimates that merchandise with a sales value of $840 will be returned. An invoice totaling $100 was received by Mount on June 8 from Olympic Transport Service for the freight cost. Upon receipt of the goods, on June 8, Mount returned to Flint $300 of merchandise containing flaws. Flint estimates the returned items are expected to be resold at a profit. The freight on the returned merchandise was $25, paid by Flint on June 8. On July 16, the company received a check for the balance due from Mount.
Prepare journal entries for Flint Company to record all the events in June and July.
Explanation / Answer
Answers
Date
Accounts title
Debit
Credit
Working
03-Jun-17
Accounts receivables [AnnMount]
$ 8,400.00
[Payment not received yet, hence Accounts receivables debited]
Sales revenue
$ 8,400.00
[Sales Revenue credited by the amount of sales]
(to record sale)
03-Jun-17
Cost of Goods Sold
$ 5,880.00
[Cost of goods that are sold is debited to this account]
Inventory
$ 5,880.00
[Inventory account is credited following perpetual method]
(to record cost of goods sold)
08-Jun-17
Sales Return
$ 300.00
[Goods returned are debited to Sales return account]
Accounts receivables [AnnMount]
$ 300.00
[Accounts receivables are decreased by the amount of goods returned]
(to record sales returns)
08-Jun-17
Inventory
$ 210.00
[Entry on 3 Jun 17 will be reversed]
Cost of Goods Sold
$ 210.00
[Amount calculated as : ($5880 / $8400) x $ 300 returned]
(to record cost of goods returned)
08-Jun-17
Inventory
$ 25.00
[Freight paid on goods returned is added to the cost of inventory]
Cash
$ 25.00
[Cash is paid]
(to record freight cost)
16-Jul-17
Cash
$ 8,100.00
[Net Amount received = $ 8400 sales - $ 300 sales return = $ 8100]
Accounts receivables [AnnMount]
$ 8,100.00
(Payment received)
Date
Accounts title
Debit
Credit
Working
03-Jun-17
Accounts receivables [AnnMount]
$ 8,400.00
[Payment not received yet, hence Accounts receivables debited]
Sales revenue
$ 8,400.00
[Sales Revenue credited by the amount of sales]
(to record sale)
03-Jun-17
Cost of Goods Sold
$ 5,880.00
[Cost of goods that are sold is debited to this account]
Inventory
$ 5,880.00
[Inventory account is credited following perpetual method]
(to record cost of goods sold)
08-Jun-17
Sales Return
$ 300.00
[Goods returned are debited to Sales return account]
Accounts receivables [AnnMount]
$ 300.00
[Accounts receivables are decreased by the amount of goods returned]
(to record sales returns)
08-Jun-17
Inventory
$ 210.00
[Entry on 3 Jun 17 will be reversed]
Cost of Goods Sold
$ 210.00
[Amount calculated as : ($5880 / $8400) x $ 300 returned]
(to record cost of goods returned)
08-Jun-17
Inventory
$ 25.00
[Freight paid on goods returned is added to the cost of inventory]
Cash
$ 25.00
[Cash is paid]
(to record freight cost)
16-Jul-17
Cash
$ 8,100.00
[Net Amount received = $ 8400 sales - $ 300 sales return = $ 8100]
Accounts receivables [AnnMount]
$ 8,100.00
(Payment received)
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