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Record transactions, sale, return, discount period

Merchandise with a list price of $7,500 and a cost of $7,000 is sold on account, terms 1/10, n/30. Prior to payment, merchandise with a list price of $1,000 and a cost of $800 is returned. The correct amount is paid within the discount period.

Record the following transactions, using the integrated financial statement framework that follows:
(a) Sold the merchandise.
(b) Received the returned merchandise
(c) Received the amount owed.

(please see attached)

(a) Sold the merchandise.
Assets = Liabilities + Stockholders' Equity
Cash Accounts Receivable Merchandise Inventory Accounts Payable Capital Stock Retained Earnings

(b) Received the returned merchandise
Assets = Liabilities + Stockholders' Equity
Cash Accounts Receivable Merchandise Inventory Accounts Payable Capital Stock Retained Earnings

(c) Received the amount owed.
Assets = Liabilities + Stockholders' Equity
Cash Accounts Receivable Merchandise Inventory Accounts Payable Capital Stock Retained Earnings

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The tutorial is attached in excel to follow the accounting equation ...

Solution Summary

The tutorial is attached in excel to follow the accounting equation format. The return would likely be booked to a contra sales account ("sales return") rather than directly to sales. If you are in the introductory account, you may not have learned that yet (so book it to sales for now).

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