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Do Now

Do Now. What would be the journal entry for a seller who has merchandise returned to them? What accounts would this affect? Would these accounts be debited or credited? Why?. 10-3: Recording Transactions Using a General Journal.

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Do Now

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  1. Do Now • What would be the journal entry for a seller who has merchandise returned to them? • What accounts would this affect? • Would these accounts be debited or credited? Why?

  2. 10-3: Recording Transactions Using a General Journal • Customer may return merchandise for credit on account or cash refund • Sales return: Credit allowed a customer for sales price of returned merchandise, resulting in decrease in vendor’s accounts receivable • Credit may be granted to customer without requiring return of merchandise and also may be given because of a shortage in a shipment • Sales allowance: credit allowed a customer for part of sales price of merchandise that is not returned, resulting in a decrease in vendor’s accounts receivable

  3. 10-3: Recording Transactions Using a General Journal • Vendor usually informs customer in writing when sales return or sales allowance is granted • Credit memorandum: form prepared by vendor showing amount deducted for returns and allowances • original given to customer and copy used as source document • Sales returns and sales allowances decrease amount of sales • Account Sales Returns and Allowances is a contra account to revenue account Sales • Thus, normal debit account balance of Sales Returns and Allowances is a debit, the opposite of the normal balance of Sales, a credit

  4. 10-3 General Journal: Sales Returns & Allowances p. 286 • When a customer returns something or receives something damaged • Source document: Credit Memorandum • The Sales transaction has already been recorded on the Sales Journal • *Remember: A General Journal requires a debit and a credit entry March 11. Granted credit to Village Crafts for merchandise returned, $58.50, plus sales tax, $3.51, from S150; total, $62.01, Credit Memorandum # 41

  5. PRACTICE: • 10-3 WT - Textbook page 287, WP page 229 • 10-3 OYO – Textbook page 287, WP page 230

  6. Continued Problems • Application Problems 10-1 thru 10-3 • Textbook Pages 289-290 • Working Papers Pages 231-233 • Working Papers Study Guide: • Pages 221-223

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