Customer refund
Senger Company sold merchandise of $15,500, terms 2/10, n/30, to Burris Inc. on April 23. Burris paid Senger for the merchandise on May 2. On May 12, Senger paid Burris $650 for costs incurred by Burris to repair defective merchandise. (A)
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- Air Compressors Inc. purchases compressor parts for its inventory from a supplier. The following transactions take place during the current year: A. On April 5, the company purchases 400 parts for $8.30 per part, on credit. Terms of the purchase are 4/ 10, n/30, invoice dated April 5. B. On May 5, Air Compressors does not pay the amount due and renegotiates with the supplier. The supplier agrees to $400 cash immediately as partial payment on note payable due, converting the debt owed into a short-term note, with a 7% annual interest rate, payable in three months from May 5. C. On August 5, Air Compressors pays its account in full. Record the journal entries to recognize the initial purchase, the conversion plus cash, and the payment.arrow_forwardWindow World extended credit to customer Nile Jenkins in the amount of $130,900 for his purchase of window treatments on April 2. Terms of the sale are 2/60, n/150. The cost of the purchase to Window World is $56,200. On September 4, Window World determined that Nile Jenkinss account was uncollectible and wrote off the debt. On December 3, Mr. Jenkins unexpectedly paid in full on his account. Record each Window World transaction with Nile Jenkins. In order to demonstrate the write-off and then subsequent collection of an account receivable, assume in this example that Window World rarely extends credit directly, so this transaction is permitted to use the direct write-off method. Remember, however, that in most cases the direct write-off method is not allowed.arrow_forwardLaminate Express extended credit to customer Amal Sunderland in the amount of $244,650 for his January 4 purchase of flooring. Terms of the sale are 2/30, n/120. The cost of the purchase to Laminate Express is $88,440. On April 5, Laminate Express determined that Amal Sunderlands account was uncollectible and wrote off the debt. On June 22, Amal Sunderland unexpectedly paid 30% of the total amount due in cash on his account. Record each Laminate Express transaction with Amal Sunderland. In order to demonstrate the write-off and then subsequent collection of an account receivable, assume in this example that Laminate Express rarely extends credit directly, so this transaction is permitted to use the direct write-off method. Remember, though, that in most cases the direct write-off method is not allowed.arrow_forward
- Serene Company purchases fountains for its inventory from Kirkland Inc. The following transactions take place during the current year. A. On July 3, the company purchases thirty fountains for $1,200 per fountain, on credit. Terms of the purchase are 2/10, n/30, invoice dated July 3. B. On August 3, Serene does not pay the amount due and renegotiates with Kirkland. Kirkland agrees to convert the debt owed into a short-term note, with an 8% annual interest rate, payable in two months from August 3. C. On October 3, Serene Company pays its account in full. Record the journal entries to recognize the initial purchase, the conversion, and the payment.arrow_forwardRecord journal entries for the following transactions of Barrera Suppliers. A. May 12: Sold 32 deluxe hammers at $195 each to a customer, credit terms 10/10, n/45, invoice date May 12; the deluxe hammers cost Barrera Suppliers $88 each. B. May 15: Customer returned 6 hammers for a full refund. The merchandise was in sellable condition at the original cost. C. May 20: Customer found 2 defective hammers but kept the merchandise for an allowance of $200. D. May 22: Customer paid their account in full with cash.arrow_forwardRecord journal entries for the following transactions of Mason Suppliers. A. Sep. 8: Purchased 50 deluxe hammers at a cost of $95 each from a manufacturer. Credit terms are 5/20, n/60, invoice date September 8. B. Sep. 12: Mason Suppliers returned 8 hammers for a full refund. C. Sep. 16: Mason Suppliers found 4 defective hammers, but kept the merchandise for an allowance of $250. D. Sep. 28: Mason Suppliers paid their account in full with cash.arrow_forward
- Senger Company sold merchandise of $19,500, terms n/30, to Burris Inc. on April 12. Burris paid Senger for the merchandise on May 12. On June 1, Senger paid Burris $400 for costs incurred by Burris to repair defective merchandise. a. Journalize the entry by Senger Company to record the customer refund to Burris Inc. b. Assume that instead of paying Burris cash, Senger issued a credit memo to Burris to be used against Burris's outstanding account receivable balance. Journalize the entry by Senger Company to record the issuance of the credit memo.arrow_forwardUse the perpetual system only for these transactions, show journal entries to record the following: May 15 Homes Ltd sold $4000 of merchandise on credit to SR Holdings Ltd, terms 2/10, n30. The cost of merchandise to Homes Ltd from its supplier was $2500. May 16 it is agreed to give to the customer from May 15 sale, a sales allowance of $500 for damage to the goods occurred during delivery to the customer May 24 SR Holdings Ltd paid to Homes Ltd the amount due, after the allowance was givenarrow_forwardPurchase-related transaction Shepherd Company purchased merchandise on account from a supplier for $9,000, terms 2/10, n/30. Shepherd Company returned $1,500 of the merchandise before payment was made and received full credit. a. If Shepherd Company pays the invoice within the discount period, what is the amount of cash required for the payment? $ b. Which accounts are decreased by Shepherd Company to record the return Inventory and Accounts Payablearrow_forward
- On November 1, Al Ain Systems purchases merchandise for $1,500 on credit with terms of 2/5, n/30, FOB shipping point; invoice dated November 1. On November 5, Al Ain Systems pays cash for the November 1 purchase. On November 7, Al Ain Systems discovers and returns $200 of defective merchandise purchased on November 1 for a cash refund. On November 10, Al Ain Systems pays $90 cash for transportation costs with the November 1 purchase. On November 13, Al Ain Systems sells merchandise for $1,600 on credit. The cost of the merchandise is $800. On November 16, the customer returns merchandise from the November 13 transaction. The returned items are priced at $300 and cost $130; the items were not damaged and were returned to inventory. Required: Journalize the above merchandising transactions for Al Ain Systems assuming it uses a perpetual inventory system.arrow_forwardCustomer refunds, allowances, and re On February 18, Silverman Enterprises sold $24,000 of merchandise to Brewster Co. with terms 2/10, n/30. The cost of the merchandise sold was $12,200. On February 23, Silverman Enterprises issued Brewster Co. a credit memo for returned merchandise. The invoice amount of the returned merchandise was $3,000, and the merchandise originally cost Silverman Enterprises $1,800. a. Journalize the entries by Silverman Enterprises to record the February 18 sale. If an amount box does not require an entry, leave it blank.arrow_forwardAfter the amount due on a sale of $23,300, terms 2/10, n/eom, is received from a customer within the discount period, the seller consents to the return of the entire shipment for a cash refund on March 1. The cost of the merchandise returned was $17,090. Required: (a) What is the amount of the refund owed to the customer? (b) Journalize the entries made by the seller to record the return and the refund. Refer to the Chart of Accounts for exact wording of account titles. CHART OF ACCOUNTS General Ledger ASSETS 110 Cash 120 Accounts Receivable 125 Notes Receivable 130 Merchandise Inventory 131 Estimated Returns Inventory 140 Office Supplies 141 Store Supplies 142 Prepaid Insurance 180 Land 192 Store Equipment 193 Accumulated Depreciation-Store Equipment 194 Office Equipment 195 Accumulated Depreciation-Office Equipment LIABILITIES 210 Accounts Payable 216 Salaries Payable 218 Sales Tax Payable 219 Customers…arrow_forward
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