On June 3, 2017, Marin Company sold to Ann Mount merchandise having a sales pric

Question

On June 3, 2017, Marin Company sold to Ann Mount merchandise having a sales price of $8,400 (cost $5,880) with terms of n/60, f.o.b. shipping point. Marin estimates that merchandise with a sales value of $840 will be returned. An invoice totaling $130 was received by Mount on June 8 from Olympic Transport Service for the freight cost. Upon receipt of the goods, on June 8, Mount returned to Marin $300 of merchandise containing flaws. Marin estimates the returned items are expected to be resold at a profit. The freight on the returned merchandise was $22, paid by Marin on June 8. On July 16, the company received a check for the balance due from Mount.

Prepare journal entries for Marin Company to record all the events in June and July.

Explanation / Answer

Date Account Debit credit June 3 2017 Accounts receivable 8400 sales revenue 8400 [Sales made on Account ] cost of goods sold 5880 Merchandise inventory 5880 [cost of sales recorded] June 8 No entry In books of Marin company .Transaction will be recorded in books od Mount June 8 Sales Return and allowance 300 Accounts receivable 300 [being inventory returned] Merchandise inventory 210 cost of goods sold 210 [Being cost of inventory returned recorded 5880*300/8400] June 8 Freight expense 22 cash 22 June 16 Cash 8100 Accounts receivable 8100 [Being balance due received 8400-300]

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