Record the following transactions for Sunland Company using a perpetual inventory system. Include margin explanations for the changes in revenues and expenses.

a. On March 2, Sunland Company sold $928,000 of merchandise to Blossom Company on account. The cost of the merchandise sold was $626,400.
b. On March 6, Blossom Company returned $162,400 of the merchandise purchased on March 2. The cost of the merchandise returned was $109,040.
c. On March 12, Sunland Company received the balance due from Blossom Company.

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Zviko Zviko · Answer 1 · 2020-10-15T16:21:00+02:00

Answer:

March 2

Account Receivable : Blossom Company $928,000 (debit)

Cost of Goods Sold $626,400 (debit)

Sales Revenue $928,000 (credit)

Merchandise Inventory $626,400 (credit)

Sale of Merchandise to Blossom Company on credit

March 6

Sales Revenue $162,400 (debit)

Merchandise Inventory $109,040 (debit)

Account Receivable : Blossom Company $162,400 (credit)

Cost of Goods Sold $109,040 (credit)

Merchandise returned by Blossom Company

March 12

Cash $765,600 (debit)

Account Receivable : Blossom Company $765,600 (credit)

Blossom Company pays for the Account owing

Explanation:

Perpetual Inventory method recalculates the value of goods held after each transaction.

See the Journals and narrations i have prepared above.