Answer:
On October 5
Debit Accounts receivable $6,370
Credit Sales Revenue $6,370
Debit Cost of goods sold $3,420
Credit inventory account $3,420
October 8
Debit Sales Revenue (Sales return) $680
Credit Accounts receivable $680
Debit Inventory account $440
Credit Cost of goods sold $440
Explanation:
When goods are on account, the entries required are
Debit Accounts receivable
Credit Sales Revenue
To record the amount made from sales. Furthermore, there is a reduction in inventory. This will also be accounted for by
Debit Cost of goods sold
Credit inventory account
When returns are made, the debits and credits above are reversed.
