Hair World Inc. is a wholesaler of hair supplies. Hair World uses a perpetual in
ID: 2426752 • Letter: H
Question
Hair World Inc. is a wholesaler of hair supplies. Hair World uses a perpetual inventory system. The following transactions (summarized) have been selected for analysis: a. Sold merchandise for cash (cost of merchandise $10,797). $15,200 b. Received merchandise returned by customers as unsatisfactory (but in perfect condition), for cash refund (original cost of merchandise $90). 150 c. Sold merchandise (costing $2,613) to a customer, on account with terms 2/10, n/30. 5,500 d. Collected half of the balance owed by the customer in (c) within the discount period. 2,695 e. Granted a partial allowance relating to credit sales that the customer in (c) had not yet paid 88
Explanation / Answer
Analysis of transactions:
Date
Description
Debit
Credit
a
Cash
15,200
Sales
15,200
(Being sale made)
a
Cost of goods sold
10,797
Finished goods inventory
10,797
(To record the cost of goods sold)
b
Sales
150
Cash
150
(Refund of cash purpose)
b
Finished goods inventory
90
Cost of goods sold
90
(Return of goods)
c
Accounts receivable
5,500
Sales
5,500
(To record the sale)
c
Cash
2,695
Accounts receivable
2,695
(To record collection of cash)
c
Cash
2,717
Discount allowed
88
Accounts receivable
2,805
(To record the receipt)
Date
Description
Debit
Credit
a
Cash
15,200
Sales
15,200
(Being sale made)
a
Cost of goods sold
10,797
Finished goods inventory
10,797
(To record the cost of goods sold)
b
Sales
150
Cash
150
(Refund of cash purpose)
b
Finished goods inventory
90
Cost of goods sold
90
(Return of goods)
c
Accounts receivable
5,500
Sales
5,500
(To record the sale)
c
Cash
2,695
Accounts receivable
2,695
(To record collection of cash)
c
Cash
2,717
Discount allowed
88
Accounts receivable
2,805
(To record the receipt)
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