Determine the amount to be paid in full settlement of each of two invoices, (a) and (b), assuming that credit for returns

Determine the amount to be paid in full settlement of each of two invoices, (a) and (b), assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.

Merchandise Freight Paid by Seller Freight Terms Returns and Allowances

a. $ 90,000 $1,000 FOB shipping point, 1/10, n/30 $15,000

b. 110,000 1,575 FOB destination, 2/10, n/30 8,500

Answer:

a. $75,250. Purchase of $89,100 [$90,000 – ($90,000 × 1%)] less return of $14,850 [($15,000 – ($15,000 × 1%)] plus $1,000 of shipping.

b. $99,470. Purchase of $107,800 [$110,000 – ($110,000 × 2%)] less return of $8,330 [$8,500 – ($8,500 × 2%)].

Determine the amount to be paid in full settlement of each of two invoices, (a) and (b), assuming that credit for returns

Determine the amount to be paid in full settlement of each of two invoices, (a) and (b), assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.

Merchandise Freight Paid by Seller Freight Terms Returns and Allowances

a. $36,000 $800 FOB destination, 1/10, n/30 $4,000

b. 44,900 375 FOB shipping point, 2/10, n/30 2,400

Answer:

a. $31,680. Purchase of $35,640 [$36,000 – ($36,000 × 1%)] less return of $3,960 [$4,000 – ($4,000 × 1%)].

b. $42,025. Purchase of $44,002 [$44,900 – ($44,900 × 2%)] less return of $2,352 [$2,400 – ($2,400 × 2%)] plus $375 of shipping.

After the amount due on a sale of $28,000, terms 2/10, n/eom, is received from a customer within the discount period,

After the amount due on a sale of $28,000, 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. The cost of the merchandise returned was $16,800. (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.

Answer:

a. $27,440 [$28,000 – ($28,000 × 2%)]

b. Customer Refunds Payable27,440

Cash27,440

Merchandise Inventory16,800

Estimated Returns Inventory16,800