Question

After the amount due on a sale of $28,000, terms 2/10, 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 $ 16,800.

What is the amount of the refund owed to the customer? $ _____
Journalize the entries made by the seller to record (A) the refund and ( B) the return of merchandise.
A. Sales Returned and Allowances _____ Sales Discounts _____ Cash _____

B. Merchandise Inventory _____ Cost of Merchandise Sold _____

Answer 1

Answer: Please see explanation column for answers

Explanation:

A) Amount refund owed to customer=

Sale of item - discount on item

=$28000- ($28000 x 2%) = $27,440

B)Journal of the entries made by the seller to record  refund

Dr Sales Returned and allowances - $28,000

Cr Sales Discount $560

Cr Cash $27,440

c)  Journal of the entries made by the seller to record  return of merchandise

Cr Merchandise Inventory-$16,800

Dr Cost of Merchandise  Sold -$16,800

Answer 2

Answer:

The amount of refund owed to customer is the amount of cash $27,440 received from the customer.

Dr sales returned and allowances       $28,000

Cr Cash                                                                  $27,440

Cr sales discount                                                    $560

Return of merchandise:

Dr merchandise inventory                      $16,800

Cr Cost of merchandise sold                                $16,800

Explanation:

The entries passed initially that need to be reversed now are:

The discount on the sale is 2% of $28,000=$560 debit to sales discount

Cash received from the customer =$28000-$560=$27,440 debit to cash account

Actual amount debited to sales is $28,000 credit to sales account

Upon return of the merchandise,the merchandise inventory is debited and cost of merchandise sold is credited with cost of merchandise at $16,800