Prepare the journal entries to record the following transactions on Sandhill Company’s books using a perpetual inventory system.

Question

6 days ago

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Prepare the journal entries to record the following transactions on Sandhill Company’s books using a perpetual inventory system.

(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.) (a) On March 2, Sandhill Company sold $887,400 of merchandise to Teal Mountain Company on account, terms 2/10, n/30. The cost of the merchandise sold was $571,700. (b) On March 6, Teal Mountain Company returned $103,200 of the merchandise purchased on March 2. The cost of the merchandise returned was $62,500. (c) On March 12, Sandhill Company received the balance due from Teal Mountain Company.

Business

1 answer:

Nady [3.2K] · Answer 1 · 2026-04-01T16:14:41+03:00

Answer:

Explanation:

a. On March 2

Debiting Accounts Receivable A/c $$887,400

Crediting Sales A/c $$887,400

(Recognizing the sale of inventory at sale price)

Debiting Cost of Goods Sold A/c $

Crediting Merchandise Inventory A/c $571,700

(Recognizing merchandise sold at cost)

b. On March 8

Debiting Sales Return and Allowance A/c $103,200

Crediting Accounts Receivable $103,200

(Recording the sales return)

Debiting Merchandise Inventory A/c $62,500

Crediting Cost of Goods Sold A/c $62,500

(Recording the sales return)

c. On March 12

Debiting Cash A/c $768,516

Debiting Sales Discounts A/c $15,684

Crediting Accounts Receivable A/c $784,200

(Recording cash received)

Calculating the balance owed is as follows:

= Sale of inventory - Returns

= $887,400 - $103,200

= $784,200

And the discount = $784,200 × 2% = 15,684