After the amount due on a sale of $28,200, terms 2/10, n/eom, is received from a
ID: 2554570 • Letter: A
Question
After the amount due on a sale of $28,200, terms 2/10, n/eom, is received from a customer within the discount period, the seller consents to the return of the entire shipment for a cash refund. The cost of the merchandise returned is $16,700.
A.
What is the amount of the refund owed to the customer?
B.
Journalize the entries made by the seller to record the return and the refund. Refer to the Chart of Accounts for exact wording of account titles.
CHART OF ACCOUNTSGeneral Ledger
ASSETS
110
Cash
120
Accounts Receivable
125
Notes Receivable
130
Inventory
131
Estimated Returns Inventory
140
Office Supplies
141
Store Supplies
142
Prepaid Insurance
180
Land
192
Store Equipment
193
Accumulated Depreciation-Store Equipment
194
Office Equipment
195
Accumulated Depreciation-Office Equipment
LIABILITIES
210
Accounts Payable
216
Salaries Payable
218
Sales Tax Payable
219
Customer Refunds Payable
220
Unearned Rent
221
Notes Payable
EQUITY
310
Common Stock
311
Retained Earnings
312
Dividends
313
Income Summary
REVENUE
410
Sales
610
Rent Revenue
EXPENSES
510
Cost of Goods Sold
521
Delivery Expense
522
Advertising Expense
524
Depreciation Expense-Store Equipment
525
Depreciation Expense-Office Equipment
526
Salaries Expense
531
Rent Expense
533
Insurance Expense
534
Store Supplies Expense
535
Office Supplies Expense
536
Credit Card Expense
539
Miscellaneous Expense
710
Interest Expense
A. What is the amount of the refund owed to the customer?
B. Journalize the entries made by the seller to record the return and the refund on December 31. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 10
JOURNAL
ACCOUNTING EQUATION
DATE
DESCRIPTION
POST. REF.
DEBIT
CREDIT
ASSETS
LIABILITIES
EQUITY
1
2
3
4
A.
What is the amount of the refund owed to the customer?
B.
Journalize the entries made by the seller to record the return and the refund. Refer to the Chart of Accounts for exact wording of account titles.
Explanation / Answer
(a)Amount of the refund owed to the customer
Amount of the refund owed to the customer = $ 28,200 – ($28,200 x 2%)
= $ 28,200 -$ 564
= $ 27,636
(b)Journal entries made by the seller to record the return and the refund
DR Sales Returns & Allowances A/c $ 28,200
CR Sales Discounts A/c $ 564
CR Cash A/c $ 27,636
(to record the return and refund customer's payment)
DR Inventory A/c $ 16,700
CR Cost Of Sales Ac/c $ 16,700
(to return the returned shipment to inventory)