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Longmire & Sons made sales on credit to Alderman Sports totaling $500,000 on April 18. The cost of the goods sold is $400,000. Longmire estimates 3% of its sales to Alderman may be returned. On May 22, $9,000 worth of goods (with a cost of $7,200) are returned by Alderman. Assume Longmire uses a perpetual inventory system.

Required:
Prepare the related journal entries for Longmire & Sons.

Sagot :

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Answer:

April 18

Dr Account receivable 500,000

Cr Cash 500,000

April 18

Dr Cost of goods sold 400,000

Cr Merchandize inventory 400,000

May 22

Dr Sales return and allowance 9,000

Cr Account receivable 9,000

May 22

Dr Merchandize inventory 7,200

Cr Cost of goods sold 7,200

Explanation:

Preparation of the related journal entries for Longmire & Sons.

Based on the information given the related journal entries for Longmire & Sons will be :

April 18

Dr Account receivable 500,000

Cr Cash 500,000

(Being to record credit sales)

April 18

Dr Cost of goods sold 400,000

Cr Merchandize inventory 400,000

(Being to Record cost of goods sold)

May 22

Dr Sales return and allowance 9,000

Cr Account receivable 9,000

(Being to record goods return)

May 22

Dr Merchandize inventory 7,200

Cr Cost of goods sold 7,200

(Being to Record cost of goods return)

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