Example – Journal Entry for Sale Return & Allowance
XYZ Company purchased and sold two products, Product X and Product Y.
On 3 March 20X1, XYZ recorded credit sales of 200 units for product X and 300 units for product Y to customers for $200 and $300 each respectively.
On 6 March 20X1, the customer returned 100 units of product X and 50 Units of product Y to XYZ Company.
The XZY Company purchase product X at $100 per units and product B at $250.
Show the general entries to record sales and sales return in the books of XYZ Company.
When Sold
| Dr. Account Receivable (200*$200+300*$300) | 130,000 | ||
| Cr. Sale | 130,000 | ||
| Dr. Cost of goods sold(200*$100+300*$250) | 95,000 | ||
| Cr. Inventory | 95,000 |
When Return
| Dr. Sale Return and Allowance(100*$200 +50*$300) | 35,000 | ||
| Cr. Account Receivable | 35,000 | ||
| Dr. Inventory(100*$100 +50*$250) | 22,500 | ||
| Cr. Cost of goods sold | 22,500 |