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25 November, 18:23

Kate Company uses a perpetual inventory system.

Record the journal entries for the following transactions:

a. On July 16, Kate sold $1,200 of merchandise with terms of 2/10, n/30. The cost of the merchandise was $720.

b. On July 19, the customer returned $200 of the merchandise from (a). The cost of the merchandise was $120.

c. On July 22, the customer paid the entire balance due to Kate.

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  1. 25 November, 18:28
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    The journal entries are as follows:

    (a) On July 16,

    Account receivable A/c Dr. $1,200

    To sales revenue $1,200

    (To record Sales)

    Cost of goods sold A/c Dr. $720

    To Inventory $720

    (To record cost of goods sold)

    (b) On July 19,

    Sales return and allowance a/c Dr. $200

    To Account receivable $200

    (To record sales return)

    Inventory A/c Dr. $120

    To Cost of goods sold $120

    (To record cost of goods return)

    (c) On July 22,

    Cash (1,000 * 98%) A/c Dr. $980

    Sales discount A/c Dr. $20

    To Account receivable $1,000

    (To record amount received)
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