On March 1, Showcase Co., a furniture wholesaler, sells merchandise to Balboa Co. on account, $254,500, terms n/30. The cost of the merchandise sold is $152,700. On March 5, Showcase Co. issues a credit memo for $30,000 for merchandise returned prior to Balboa Co. paying the original invoice on March 29. The cost of the merchandise returned is $17,500.

Journalize Balboa Co.'s entries for (a) the purchase, (b) the return of the merchandise for credit, and (c) the payment of the invoice. Refer to the Chart of Accounts for exact wording of account titles.

Question

Amber Suarez

Business

10 May, 17:48

On March 1, Showcase Co., a furniture wholesaler, sells merchandise to Balboa Co. on account, $254,500, terms n/30. The cost of the merchandise sold is $152,700. On March 5, Showcase Co. issues a credit memo for $30,000 for merchandise returned prior to Balboa Co. paying the original invoice on March 29. The cost of the merchandise returned is $17,500.

Journalize Balboa Co.'s entries for (a) the purchase, (b) the return of the merchandise for credit, and (c) the payment of the invoice. Refer to the Chart of Accounts for exact wording of account titles.

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Answers (1)

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Talon Hicks · Answer 1

The journal entries are as follows

a.

Merchandise Inventory A/c $254,500

To Accounts payable A/c $254,500

(Being merchandise purchased on credit)

b.

Account payable Dr $30,000

To Merchandise inventory $30,000

(Being the merchandise returned is recorded)

c.

Account payable Dr $224,500 ($254,500 - $30,000)

To Cash $224,500

(Being the payment of the invoice is recorded)