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Chapter 5 - BE5-3 Correct Prepare the journal entries to...

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BE5-3
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Correct. Prepare the journal entries to record the following transactions on Monroe Company's books using a perpetual inventory system. (a) On March 2, Monroe Company sold $900,000 of merchandise to Churchill Company, terms 2/10, n/30. The cost of the merchandise sold was $620,000. Description Debit Credit Accounts Receivable 900,000 Sales 900,000 Cost of Goods Sold 620,000 Merchandise Inventory 620,000 (To record cost of merchandise sold.) (b) On March 6, Churchill Company returned $120,000 of the merchandise purchased on March 2 because it was defective. The cost of the returned merchandise was $90,000. Description Debit Credit Sales Returns and Allowances 120,000 Accounts Receivable 120,000 Merchandise Inventory 90,000 Cost of Goods Sold 90,000 (To record cost of merchandise sold.) (c) On March 12, Monroe Company received the balance due from Churchill Company. (List multiple debit/credit entries in descending order of amount.) Description/Account Debit Credit Cash 764400 Sales Discounts 15600 Accounts Receivable 780000 BE5-2
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Correct. Hollins Company buys merchandise on account from Gordon Company. The selling price of the goods is $780, and the cost of the goods is $520. Both companies use perpetual inventory
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