Customer return and refund

On December 28, 20Y3, Silverman Enterprises sold $17,000 of merchandise to Beasley Co. with terms 2/10, n/30. The cost of the goods sold was $11,100. On December 31, 20Y3, Silverman prepared its adjusting entries, yearly financial statements, and closing entries. On January 3, 20Y4, Silverman Enterprises issued Beasley Co. a credit memo for returned merchandise. The invoice amount of the returned merchandise was $4,000 and the merchandise originally cost Silverman Enterprises $2,300.

a. Journalize the entries by Silverman Enterprises to record the December 28, 20Y3 sale, using the net method under a perpetual inventory system. If an amount box does not require an entry, leave it blank.

20Y3 Dec. 28	Accounts Receivable-Beasley Co.
	Sales
20Y3 Dec. 28	Cost of Goods Sold
	Inventory

b. Journalize the entries by Silverman Enterprises to record the merchandise returned by Beasley Co. on January 3, 20Y4. If an amount box does not require an entry, leave it blank.

20Y4 Jan. 3	Customer Refunds Payable
	Accounts Receivable-Beasley Co.
20Y4 Jan. 3	Inventory
	Estimated Returns Inventory

Feedback

To record a customer refund, a liability account to estimate refunds that will be paid to customers is used. Depending on whether the customer has paid for the merchandise, a cash refund or credit memo will be issued.

c. Journalize the entry to record the receipt of the amount due by Beasley Co. on January 7, 20Y4. If an amount box does not require an entry, leave it blank.

20Y4 Jan. 7	Cash
	Accounts Receivable-Beasley Co.