Nagle company purchased $2,500 worth of merchandise, terms n/30, from the Crafton Co on June 4. The cost of the merchandise to Crafton was $1800.
On June 10, Nagle returned $350 worth of goods to Crafton for full credit. The goods had a cost of $225 to Crafton.
On June 12, the account was paid in full.
Prepare entries in journal form with explanations to record these transactions in
a) Nagle's records
b) Crafton's records
Assume use of the perpetual inventory system by both companies.

Quote:

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Originally Posted by Akhatoon

Nagle company purchased $2,500 worth of merchandise, terms n/30, from the Crafton Co on June 4. The cost of the merchandise to Crafton was $1800.
On June 10, Nagle returned $350 worth of goods to Crafton for full credit. The goods had a cost of $225 to Crafton.
On June 12, the account was paid in full.
Prepare entries in journal form with explanations to record these transactions in
a) Nagle's records
b) Crafton's records
Assume use of the perpetual inventory system by both companies.

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For a (nagle's records)

Dr. Merchandise Inventory... 2,500
Cr. Accounts Payable... 2,500
-------------------------------------------------
Dr. Accounts Payable... 350
Cr. Merchandise Inventory... 350
---------------------------------------------------------
Dr. Accounts Payable... 2,150
Cr. Cash... 2,150
---------------------------------------------------------

For b (crafton's records)

Dr. Accounts receivable... 2,500
Cr. Sales... 2,500
-----------------------------------------------------
Dr. Cost of goods sold... 1,800
Cr. Merchandise Inventory... 1,800
----------------------------------------------------
Dr.Sales returns and allowances... 350
Cr. Accounts Receivable... 350
----------------------------------------------------
Dr. Merchandise Inventory... 225
Cr. Cost of goods sold... 225
----------------------------------------------------------
Dr. Cash... 2,150
Cr. Accounts receivable... 2,150

Hope this could help you

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Can you please help me with the periodic inventory system.. question that I posted.. Thank you!