Towbin Products sells merchandise on credit for $7,000 on December 1, 2019. The merchandise cost Towbin $4,900 (70% of the selling price). Towbin estimates that returns and allowances will amount to 4% of sales. On December 22, 2019, a customer returns for credit merchandise originally sold on December 1 for $200.

Required:

2. Assume that Towbin uses a perpetual inventory system. Prepare the journal entries to record the preceding sale and the return of merchandise.

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GENERAL JOURNAL

Score: 121/125

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1	Dec 1	Accounts Receivable		7000
2		Sales Revenue			6720
3		Return Liability			280
4	Dec 1	Cost of Good Sold		4704
5		Return Asset		196
6		Inventory			4900
7	Dec 22	Return Liability		200
8		Accounts Receivable			200
9	Dec 22	Inventory		X
10		Return Asset			X