Assignment:
Jernigan Jerseys is a wholesaler distributing various NFL, NBA, and MLB style jerseys of various quality to minor league and non-professional teams.
Two weeks ago they sold 25 jerseys on account to the Canton Catfish varsity football team in Canton, Mississippi for $45 each with an inventory cost of $28 each.
Last week seven of the jerseys were returned to Jernigan by Canton as the player's names were misspelled and have already been replaced through a different vendor.
If Jernigan uses the perpetual inventory method, what would be the journal entry (or entries) to put these seven jersey's back into inventory and to adjust the Canton Catfish account.
Jernigan Jerseys
DATE Account Name Post Ref DEBIT CREDIT
1 Accounts Receivable $1,125
Sales $1,125
Cost of Goods Sold $700
Merchandise Inventory $700
2 Accounts Receivable $1,825
Sales $1,825
3 Sales Returns & Allowance $315
Accounts Receivable $315
Merchandise Inventory $196
Cost of Goods Sold $196
4 Accounts Payable $315
Cash $315
Answer
A. Item # 1 is the correct journal entry
B. Item # 4 is the correct entry
C. Item # 2 is the correct journal entry
D. Item # 3 is the correct entry