The following information applies to the questions displayed below] Hair World I

Question

The following information applies to the questions displayed below] 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 $16,797). b. Received merchandise returned by customers as unsatisfactory (but in perfect $27,200 300 condition), for cash refund (original cost of merchandise $180). c. Sold merchandise (costing $3,325) to a customer, on account with terms 2/10, n/30. d. Collected half of the balance owed by the customer in (c) within the discount period. e. Granted a partial allowance relating to credit sales that the customer in (c) had not yet 7,000 3,430 112 paid

Explanation / Answer

Solution:(a)1: following is the required journal entry:

Cash A/C (debit). $27,200

Sales revenue A/C (Credit). $27,200

Cost of goods sold (debit). $16,797

Inventory (credit). $16,797

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