Journal entry

[TrueTears]

A company sells 5 goods each priced at $300 to a firm on credit on May 4 2010. The following transactions then occured:

May 6 2010: Sales return and allowances are $300, the cost of each good was $130 and now the good is being sold at $200.

What is the journal entries for May 6? (I can get the first 2, there is a debit to Sales R/A of 300 and credit of accounts receivable for 300, then there is a debit of 130 to inventory and credit cost of sales of 130.) I can't tie in the last part "...now the good is being sold at $200"

[mba]

Unless there are some guys who did accounting last year, I don't think you'll get many replys. Returns of stock is dealt with in Unit 4 of the VCE course, not unit 3.

I don't think the $200 would be applicable though, as no new sales transaction has taken place.

Wouldn't you just record the stock again at it's orginial cost price ($130 each)?

MBA.

[TrueTears]

So the $200 is just good for nothing?  :2funny:

[Yitzi_K]

Yeh looks like it's in there just to throw you off.
As mba said we haven't done it yet cos its in Unit 4 but I can't see any reason why the future selling price should have any effect.

[TrueTears]

kk cool thx guys

[Fyrefly]

The $200 is a red herring... you don't need to do anything with it.