Question

A seller uses a perpetual inventory system, and on April 17, a customer returns $1,000 of merchandise previously purchased on credit on April 13. The seller's cost of the merchandise returned was $480. The merchandise is not defective and is restored to inventory. The seller has not yet received any cash from the customer. Complete the two journal entries to record the return transaction by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns. The first journal entry is to record the revenue part of the transaction and the second journal entry is to record the cost part

Answer 1

Answer:

inventory       1,000 debit

   accounts payable     1,000 credit

account payable   480 dedit

   inventory                 480 credit

Explanation:

On the perpetual method, we adjust inventory right away and we do not use return and allocance account to get net sales or net purchases.

We directly adjust inventory account.

In the first transaction we increase the inventory for the amount purchased

In the second, we decreased by the amount returned.

In both cases, against accounts payable as when purchase this invenotry we assume the obligation to pay for it; while returing a portion decreases this liaiblity