Question

Showcase Co., a furniture wholesaler, sells merchandise to Balboa Co. on account, $47,600, terms n/30. The cost of the goods sold is $28,600. Showcase Co. issues a credit memo for $9,500 for merchandise returned prior to Balboa Co. paying the original invoice. The cost of the merchandise returned is $5,700. a. Journalize Showcase Co.'s entries for (1) the sale, including (2) the cost of the goods sold. If an amount box does not require an entry, leave it blank. (1) (2) b. Journalize Showcase Co.'s entries for (1) the credit memo, including (2) the cost of the returned merchandise. If an amount box does not require an entry, leave it blank. (1) (2) c. Journalize Showcase Co.'s entry for the receipt of the check for the amount due from Balboa Co. If an amount box does not require an entry, leave it blank.

Answer 1

To journalize Showcase Co.'s entries, debit Accounts Receivable and credit Sales for the sale, debit Cost of Goods Sold and credit Inventory for the cost of goods sold, debit Sales Returns and Allowances and credit Accounts Receivable for the credit memo, debit Inventory and credit Cost of Goods Sold for the cost of returned merchandise, and debit Cash and credit Accounts Receivable for the receipt of the check.

Step-by-step explanation:

To journalize Showcase Co.'s entries for the sale and cost of goods sold:

1. Debit Accounts Receivable and credit Sales for the amount of the sale ($47,600).
2. Debit Cost of Goods Sold and credit Inventory for the cost of the goods sold ($28,600).

To journalize Showcase Co.'s entries for the credit memo and cost of returned merchandise:

1. Debit Sales Returns and Allowances and credit Accounts Receivable for the amount of the credit memo ($9,500).
2. Debit Inventory and credit Cost of Goods Sold for the cost of the returned merchandise ($5,700).

To journalize Showcase Co.'s entry for the receipt of the check from Balboa Co.:

1. Debit Cash and credit Accounts Receivable for the amount of the check received.

Answer 2

Answer and Explanation:

The journal entries are shown below:

1. Accounts Receivable -Balboa Co. $47,600

To Sales $47,600

(Being the merchandise sold on credit)

Cost of Goods Sold $28,600

Merchandise Inventory $28,600

(Being the cost of merchandise is recorded)

2.

Customers Refunds Payable $9,500

To Accounts Receivable - Balboa Co. $9,500

(being the returned goods is recorded)

Merchandise Inventory $5,700

To Estimated Returns Inventory $5,700

(being the returned goods is recorded)

3.

Cash ($47,600 - $9,500) $38,100

To Accounts Receivable - Balboa Co. $38,100

(being the receipts is recorded)