Dogs R US uses the perpetual inventory system to account for its merchandise.

1. A customer returned merchandise.

2. Assuming that the purchase was originally bought on credit for $400 with a cost to Dogs R US of $100,

3. demonstrate required journal entry of Dogs R US to record the return by selecting all of the correct actions below

Question

Business

Kibbles

5 September, 08:42

Dogs R US uses the perpetual inventory system to account for its merchandise.

1. A customer returned merchandise.

2. Assuming that the purchase was originally bought on credit for $400 with a cost to Dogs R US of $100,

3. demonstrate required journal entry of Dogs R US to record the return by selecting all of the correct actions below

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Answers (1)

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Madalyn Villanueva · Answer 1

The journal entry for the return of the merchandise would be:

Dr Merchandise Inventory account 100 Cr Cost of Goods Sold account 100

The journal entry for the the cancellation of the debt would be

Dr Sales Returns and Allowances account 400 Cr Accounts Receivable account 400

Explanation:

A separate journal entry must be made for each transaction since the amounts are different.