Sales-Related Transactions After the amount due on a sale of $47,500, terms 1/10

Question

Sales-Related Transactions

After the amount due on a sale of $47,500, terms 1/10, n/eom, is received from a customer within the discount period, the seller consents to the return of the entire shipment. The cost of the merchandise returned was $28,500.

a. What is the amount of the refund owed to the customer?
$

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b. Journalize the entries made by the seller to record (a) the refund and (b) the return of merchandise. For a compound transaction, if an amount box does not require an entry, leave it blank.

(a)

  

  

  

  

  

  

(b)

  

  

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b. Journalize the entries made by the seller to record (a) the refund and (b) the return of merchandise. For a compound transaction, if an amount box does not require an entry, leave it blank.

(a)

  

  

  

  

  

  

(b)

  

  

Explanation / Answer

a. What is the amount of the refund owed to the customer?

Amount of the refund owed to the customer = Sale Return *(1-discount rate allowed)

Amount of the refund owed to the customer = 47500*(1-1%)

Amount of the refund owed to the customer = 47025

b. Journalize the entries made by the seller to record (a) the refund and (b) the return of merchandise. For a compound transaction, if an amount box does not require an entry, leave it blank.

No Account Title & Explaination Debit Credit a) Sales Return & Allowances 47500 Sales Discount 475 Account Recievable 47500 b) Inventory 28500 Cost of Good Sold 28500

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