Suppose Peter's Hardware sells merchandise on account, terms 2/10, n/30, for $640 (cost of the inventory is $360) on March 17, 2016. Peter's Hardware later recieved $185 of goods (cost, $110) as sales returns on March 21, 2016. The customer paid the balance due on March 26, 2016. Journalize the March 2016 transactions for Peter's Hardware.

Start by journalizing the revenue portion of the sale for Peter's Hardware.

Next, journalize the cost of goods sold.

Journalize the revenue affect of the sale return.

Next, prepare the entry for cost of goods returned.

Journalize the cash collection from the customer for Peter's Hardware.