Jernigan Jerseys is a wholesaler distributing various NFL, NBA, and MLB style je

Question

Jernigan Jerseys is a wholesaler distributing various NFL, NBA, and MLB style jerseys of various quality to minor league and non-professional teams.

Two weeks ago they sold 25 jerseys on account to the Canton Catfish varsity football team in Canton, Mississippi for $45 each with an inventory cost of $28 each.

Last week seven of the jerseys were returned to Jernigan by Canton as the player's names were misspelled and have already been replaced through a different vendor.

If Jernigan uses the perpetual inventory method, what would be the journal entry (or entries) to put these seven jerseys back into inventory and to adjust the Canton Catfish account.

Item # 3 is the correct entry

Item # 1 is the correct journal entry

Item # 2 is the correct journal entry

Item # 4 is the correct entry

                                         Jernigan Jerseys DATE Account Name Post Ref DEBIT CREDIT 1 Accounts Receivable $1,125    Sales $1,125 Cost of Goods Sold $700     Merchandise Inventory $700 2 Accounts Receivable $1,825     Sales $1,825 3 Sales Returns & Allowance $315      Accounts Receivable $315 Merchandise Inventory $196      Cost of Goods Sold $196 4 Accounts Payable $315    Cash $315

Explanation / Answer

Journal entry :

So answer is a) Item # 3 is the correct journal entry

Date account & explanation debit credit Sales return and allowance 315     Account receivable 315 (To record Sales return) Merchandise inventory 196     Cost of goods sold 196 (To record cost of goods return)

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