Prepare separate entries for each transaction for Cullumber Company. The merchandise purchased by Pharoah Company on June 10 cost Cullumber Company $3,770, and the goods returned cost Cullumber Company $230. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Question

Business

Jayden Lawrence

29 October, 01:41

Prepare separate entries for each transaction for Cullumber Company. The merchandise purchased by Pharoah Company on June 10 cost Cullumber Company $3,770, and the goods returned cost Cullumber Company $230. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

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Regina Castaneda · Answer 1

J1

Cost of Sales $3,770 (debit)

Merchandise $3,770 (credit)

J2

Merchandise $230 (debit)

Cost of Sales $230 (credit)

Explanation:

When Cullumber Company sells goods to Pharoah Company the entries to recognize the cost of sale and decrease in inventory will be:

Cost of Sales $3,770 (debit)

Merchandise $3,770 (credit)

When Pharaoh Company returns goods to Cullumber Company, the entries to de-recognize the cost of sale and recognize the replenishment of inventory will be:

Merchandise $230 (debit)

Cost of Sales $230 (credit)