On September 12, Vander Company, Inc. sold merchandise in the amount of $5,800 t

Question

On September 12, Vander Company, Inc. sold merchandise in the amount of $5,800 to Jepson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Vander uses the periodic inventory system. On September 14, Jepson returns some of the merchandise. The selling price of the returned merchandise is $500 and the cost of the merchandise returned is $350. The entry or entries that Vander must make on September 14 is:

Sales returns and allowances 500   Accounts receivable 500 Merchandise inventory 350   Cost of goods sold 350

Explanation / Answer

Entries that Vander must make on September 14 is

Incase of sales returns, Accounts receivable has to be decreased and Revenue too.

(Being Sales returned from Jepson Which was sold at $ 500)

Merchandise inventory 350   

To Cost of goods sold 350

(Being Merchandise inventory adjusted on account of sales rerurns)

Sales returns and allowances 500   Accounts receivable 500

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