USACalculation

Amel

Here is the scenario: A book warehouse distributes books to retail stores. At the end of May , that book warehouse’s inventory consisted of 270 books purchased at \$16 each. The warehouse uses a perpetual inventory system. Return rates in the book industry are high , with the warehouse experiencing a 15% return rate historically.
Mon June 3: Sold 230 books on account to a retail store for\$25 each, with an assumed average cost of \$15, terms n/45.
i recorded the sale which is fine but when I recorded the cost of goods sold there’s something wrong with my calculation I hope some help/ hints please :
Here are my findings :

Cost of goods sold : \$ 2,932.50 (wrong)
Estimated Inventory
Return: : \$517.50 (wrong)
Inventory: \$3,450 ( correct)

DrStrangeLove

VIP Member
Booking a retail sale of merchandise requires two transactions, one for the sales revenue, and one for the transfer of inventory. Booking a returns allowance is a third transaction. Show the journal entries for the parts.

Returns allowances are not booked against inventory. (Hint: that 15% return rate is returns as a percentage of what?)

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