shore co. sold merchandise to blue star co. on account, $112,000, terms fob shipping point, n/30. the cost…

shore co. sold merchandise to blue star co. on account, $112,000, terms fob shipping point, n/30. the cost of the goods sold is $67,200. shore paid freight of $1,800. shore co. issued a credit memo for $7,500 to blue star co. for merchandise that was returned. the cost of the merchandise returned was $4,000. journalize shore co.s entry for the sale, credit memo, and payment of amount due. if an amount box does not require an entry, leave it blank.

shore co. sold merchandise to blue star co. on account, $112,000, terms fob shipping point, n/30. the cost of the goods sold is $67,200. shore paid freight of $1,800. shore co. issued a credit memo for $7,500 to blue star co. for merchandise that was returned. the cost of the merchandise returned was $4,000. journalize shore co.s entry for the sale, credit memo, and payment of amount due. if an amount box does not require an entry, leave it blank.

Answer

Explanation:

Step1: Record the sale

Debit Accounts Receivable - Blue Star Co. for the selling - price of the goods sold ($112,000) and credit Sales Revenue for the same amount. Also, debit Cost of Goods Sold for the cost of the goods sold ($67,200) and credit Inventory for $67,200.

Account Title Debit Credit
Accounts Receivable - Blue Star Co. $112,000
Sales Revenue $112,000
Cost of Goods Sold $67,200
Inventory $67,200

Step2: Record the credit - memo

Debit Customer Refunds Payable for the amount of the returned merchandise ($7,500) and credit Accounts Receivable - Blue Star Co. for $7,500. Also, debit Inventory for the cost of the returned merchandise ($4,000) and credit Cost of Goods Sold for $4,000.

Account Title Debit Credit
Customer Refunds Payable $7,500
Accounts Receivable - Blue Star Co. $7,500
Inventory $4,000
Cost of Goods Sold $4,000

Step3: Record the payment

First, calculate the amount due. The original amount of accounts receivable was $112,000, and a credit - memo of $7,500 was issued. So the net amount due is $112,000 - $7,500=$104,500. Debit Cash for the amount received ($104,500) and credit Accounts Receivable - Blue Star Co. for $104,500.

Account Title Debit Credit
Cash $104,500
Accounts Receivable - Blue Star Co. $104,500

Answer:

Transaction Account Title Debit Credit
Sale Accounts Receivable - Blue Star Co. $112,000
Sale Sales Revenue $112,000
Sale Cost of Goods Sold $67,200
Sale Inventory $67,200
Credit Memo Customer Refunds Payable $7,500
Credit Memo Accounts Receivable - Blue Star Co. $7,500
Credit Memo Inventory $4,000
Credit Memo Cost of Goods Sold $4,000
Payment Cash $104,500
Payment Accounts Receivable - Blue Star Co. $104,500