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A seller uses a periodic inventory system, and on April 4, it sells $5,000 in merchandise on credit (when its cost is $2,400) to a customer on credit terms of 3/10, n/30. On April 5, the customer returns merchandise for a cash refund of $500. Complete the seller's necessary journal entry by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.

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Answer:

See explanation section.

Explanation:

                                             Journal entries

A. April 4, Account receivable        Debit        $5,000

Sales Revenue                            Credit       $5,000

Note: As the seller uses  periodic inventory system, the seller will deduct the discount only after meeting the terms. It does not have to give cost of good sold journal.

B. April 5, Customer refund payable  Debit   $500

                                           Cash          Credit  $500

Note: As the seller refunds to the customer, cash become credit.

Answer: sales returns and allowances Debit 500  Credit cash 500

Explanation:

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