5. Prepare the journal entries to record the ff transactions on Abebe Company books using a perpetual inventory system.
(a) on march 2, Abebe company sold 800000 of merchandise to ZY company, terms 2/10,n/30. The cost of the merchandise sold was 620000.
(b) on march (6) ZY Company returned 12000 of the merchandise purchased on march 2, the cost of the returned merchandise was 90000.
(c) on march 12, Abebe company received the balance due from ZY company.
(a) March 2:
Accounts Receivable 800,000
Sales Revenue 800,000
Cost of Goods Sold 620,000
Inventory 620,000
To record the sale of merchandise to ZY Company on terms.
(b) March 6:
Accounts Receivable 12,000
Sales Returns and Allowances 12,000
Inventory 9,000
Cost of Goods Sold 9,000
To record the return of merchandise purchased by ZY Company on March 2.
(c) March 12:
Accounts Receivable 784,000 (800,000 - 12,000)
Sales Discount 15,600 (784,000 x 2%)
Cash 768,400 (784,000 - 15,600)
To record the receipt of the remaining balance due from ZY Company after deducting sales discount.