So I\'m confused on the second set of journal entries. Here is the situations: D

Question

So I'm confused on the second set of journal entries. Here is the situations:

Dogtor Vet hospital needs 144 cases of dog food and 48 bags of kibble. The Company orders and recieves the case of dog food from Iams for $2,800 and the kibble from nutro for $500. All payments are net 30.
So for this I put my journal entries as:

Dr. Merchandise Inventory $3,300
Cr. A/P $3,300

Now the next situation is:
Dogtor notifies the company that they now only want 96 cases of dog food. The Company returns 48 cases to Iams.

What do i do for ^ one? It's from "The Company"'s point of view btw.

Explanation / Answer

Hi. You should maintain Separate inventory books so you can track consumption, reorder when you reach reorder level, separate acct paybles etc. So Journal entry should be as below :- Dr. Merchandise Inventory-DOg food $2800 Cr. A/P-Lams $2800 Dr. Merchandise Inventory-Kibbles $500 Cr. A/P-Nutro $500 So when you return 48 cases, cost per case = 2800/144 = $19.44 So 48 cases will cost 48* $19.44 = $933 Dr A/P-Lams $933 Cr Merchandise Inventory-DOg food $933

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