Prepare Journal Entries for HM Corp (seller) using the net method

1. June 29 DB Corp purchased $2000 of inventory from HM Corp with purchase terms 3/15, n/30. HM Corp's cost was $1,200.

Prepare the journal entry to record the sale

Prepare the journal entry to record getting rid of inventory

2. June 30, HM Corp estimated that $800 of the $1200 inventory would be returned

Prepare the journal entry to record the estimate of inventory that will be returned

Prepare the journal entry to record the estimate of sales revenue that will be lost due to expected returns

3. July 1 DB Corp returned $600 of the $2000 inventory to HM Corp. HM corp's cost of the inventory was $360.

Prepare the journal entry to record the inventory that was returned

Prepare the journal entry to eliminate part of the customer's account receivable due to the return

4. July 3, DB Corp pays for $1000 of the inventory

Prepare the journal entry to record the receipt of payment for the inventory

5. July 15, DB Corp pays for the remaining $400 of inventory

Prepare the journal entry to record the receipt of payment for the inventory