Question

Journalize the following transactions for Henderson 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.

October 1 Sold goods costing $9,000 to Hernandez Company for cash, $15,000.
October 7 Hernandez Company returned undamaged merchandise, purchased on
October 1, for a cash refund, $1,290.

Answer 1

Answer and Explanation:

The journal entries are shown below:

Cash Dr $15,000

To Sales $15,000

(Being cash is recorded)

Cost of goods sold Dr $9,000

To Merchandise inventory $9,000

(being cost of the merchandise is recorded)

Sales returns & allowances $1,290

To Cash $1,290

(being sales return is recorded)

Merchandise inventory ($1,290 × $9,000 ÷ $15,000) $774

To Cost of goods sold $774

(being merchandise inventory is recorded)