Question

Journalize the following transactions for Reed Company. Assume a perpetual inventory system. Also, assume a constant gross profit ratio for all items sold. Make sure to enter the day for each separate transaction.April 6 Sold goods costing $3,000 to Bennett Company for cash, $5,000.April 12 Bennett Company returned undamaged merchandise, purchased on April 6, for a cash refund, $630.

Answer 1

Answer and Explanation:

The Journal entry is shown below:-

1. Cash A/c Dr, $5,000

        To Sales $5,000

(Being the cash sales is recorded)

2. Cost of goods sold A/c Dr, $3,000

            To merchandise inventory $3,000

(Being the cost of goods sold is recorded)

3. Sales return and Allowances A/c Dr, $630

             To cash  $630

(Being the sales return is recorded)

4. Merchandise inventory A/c Dr, $378 (($630 ÷ $5,000) × $3,000)

          To Cost of goods sold  $378

(Being the cost of sales return and allowances is recorded)