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On October 1, Robertson Company sold inventory in the amount of $5,800 to Alberta, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robertson uses the periodic inventory system. On October 4, Alberta returns some of the inventory. The selling price of the inventory is $500 and the cost of the inventory returned is $350. What journal entry (entries) will be recorded by Robertson October 4?

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Answer:

October 4

Inventory $350 (debit)

Cost of Sales $350 (credit)

Being Recognition of Inventory and de-recognition of cost of sale

Revenue $500 (debit)

Trade Receivable $500 (credit)

Being de-recognition of Revenue and Trade Receivables.

Explanation:

The Entries that Robertson Company should enter for the 2 dates are as follows :

October 1

Cost of Sales  $4,000 (debit)

Inventory $ 4,000 (credit)

Being Recognition of Cost of Goods Sold

Trade Receivable $5,800 (debit)

Revenue $5,800 (debit)

Being Recognition of Revenue

October 4

Inventory $350 (debit)

Cost of Sales $350 (credit)

Being Recognition of Inventory and de-recognition of cost of sale

Revenue $500 (debit)

Trade Receivable $500 (credit)

Being de-recognition of Revenue and Trade Receivables.

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