Showcase Co., a furniture wholesaler, sells merchandise to Balboa Co. on account, $47,600, terms n/30. The cost of the goods sold is $28,600. Showcase Co. issues a credit memo for $9,500 for merchandise returned prior to Balboa Co. paying the original invoice. The cost of the merchandise returned is $5,700. a. Journalize Showcase Co.'s entries for (1) the sale, including (2) the cost of the goods sold. If an amount box does not require an entry, leave it blank. (1) (2) b. Journalize Showcase Co.'s entries for (1) the credit memo, including (2) the cost of the returned merchandise. If an amount box does not require an entry, leave it blank. (1) (2) c. Journalize Showcase Co.'s entry for the receipt of the check for the amount due from Balboa Co. If an amount box does not require an entry, leave it blank.

Answer and Explanation:

The journal entries are shown below:

1.  Accounts Receivable  -Balboa Co.$47,600

                     To Sales  $47,600

(Being the merchandise sold on credit)

Cost of Goods Sold$28,600

             Merchandise Inventory  $28,600

(Being the cost of merchandise is recorded)

2.

Customers Refunds Payable$9,500

          To Accounts Receivable - Balboa Co. $9,500

(being the returned goods is recorded)

Merchandise Inventory$5,700

         To Estimated Returns Inventory $5,700

(being the returned goods is recorded)

3.

Cash ($47,600 - $9,500)$38,100

          To Accounts Receivable - Balboa Co.$38,100

(being the receipts is recorded)

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