Question
During its first year of operations, Tron Auto Dealership (TAD) bought vehicles from a manufacturer on account at a cost of $620,000. TAD returned $164,000
During its first year of operations, Tron Auto Dealership (TAD) bought vehicles from a manufacturer on account at a cost of $620,000. TAD returned $164,000 of these vehicles to the manufacturer for credit on its account. TAD then sold $392,000 of the remaining vehicles at a selling price of $697,000. TADs customers rarely return vehicles, so TAD records sales returns only as they occur. One customer did return a vehicle to TAD, which had been sold to the customer for $149,000. The vehicle was in perfect condition, so it was put back into TADs inventory at TADs cost of $88,000.
Prepare journal entries to record these transactions, assuming TAD uses a perpetual inventory system.
1. Record the sale of vehicles at $697,000.
2. Record the cost of vehicles sold at $392,000.
3. Record the return of vehicles by the customer at $149,000.
4. Record the cost of vehicles returned at $88,000.
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