The debits and credits for four related entries for a sale of $15,000, terms 1/10, n/30, are presented in the following T accounts

The debits and credits for four related entries for a sale of $15,000, terms 1/10, n/30, are presented in the following T accounts. Describe each transaction.

Cash

(5) 13,860 | 

Sales

(1) 14,850

Cost of Merchandise Sold

(2) 8,800

Answer:

(1) Sold merchandise on account for $14,850, $15,000 less discount of 1%.

(2) Recorded the cost of the merchandise sold and reduced the merchandise inventory account, $8,800.

(3) Accepted a return of merchandise of $1,000 and issued a credit memo of $990, which is $1,000 less the 1% discount.

(4) Updated the merchandise inventory account for the cost of the merchandise returned, $575.

(5) Received the balance due within the discount period of $13,860; sale of $14,850 less the return of $990.