Question

Prepare separate entries for each transaction for Sunland Company. The merchandise purchased by Splish Brothers on June 10 cost Sunland $3,180, and the goods returned cost Sunland $210. (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.)

Answer 1

Answer:

For the sales on June 10

Debit Cost of Goods sold  $3,180

Credit Inventory account  $3,180

For the goods returned,

Debit Inventory account  $210

Credit Cost of goods sold  $210

Explanation:

When a sale is made from the inventory items at hand, the transaction has a dual effect. These are;

• the recognition of revenue. this involves a Debit to cash or accounts receivable and  a credit to sales
• the derecognition of inventory. this involves a debit to  cost of goods sold and a credit to inventory.

When returned are made, the reversal of these entries are posted.