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16 October, 04:57

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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  1. 16 October, 05:25
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    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)
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