Q4SE - Horngren'S Financial And Managerial Accounting

Question

Journalize the following sales transactions for Salem Sportswear. Explanations are not required. The company estimates sales returns at the end of each month.

Jul. 1 Salem sold \(20,000 of men’s sportswear for cash. Cost of goods sold is \)10,000. 

       3 Salem sold \(62,000 of women’s sportswear on account, credit terms are 3/10, n/30. Cost of goods is \)31,000. 

       5 Salem received a \(4,500 sales return on damaged goods from the customer on July 1. Cost of goods damaged is \)2,250. 

      10 Salem receives payment from the customer on the amount due, less discount.

Step-by-Step Solution

Answer

Answer

The total of debits and credits is $188,030.

Step 1: Meaning of Sales Transactions

In accounting, the events associated with the transfer of ownership are termed sales transactions. In the process of sales, the ownership of goods and services is transferred in favor of the buyer/purchaser from the seller.  

Step 2: Journal entries for sales transactions

Date	Accounts and Explanation	Debit ($)	Credit ($)
Jul 1	Cash	20,000
	Sales revenue		20,000
	(To record the cash sales)
Jul 1	Cost of goods sold	10,000
	Merchandise inventory		10,000
	(To record the cost of goods sold)
Jul 3	Accounts receivable (62,000*3%)	60,140
	Merchandise inventory		60,140
	(To record the sales on account)
Jul 3	Cost of goods sold	31,000
	Merchandise inventory		31,000
	(To record the cost of goods sold)
Jul 5	Refunds payable	4,500
	Cash		4,500
	(To record the sales return)
Jul 5	Merchandise inventory	2,250
	Estimated returns inventory		2,250
	(To record the cogs of returned inventory)
Jul 10	Cash	60,140
	Accounts receivable		60,140
	(To record the receipt of payment)