On July 23, Louie Company sold goods costing $3,000 on account for $4,500. The terms of the sale were n/30. Payment in satisfaction of $3,000 of this amount was received on August 17. Also on August 17, the customer returned goods costing $1,000 (with a sales price of $1,500). The customer reported that the goods did not meet the required specifications.
1. Make the journal entry necessary on July 23 to record the sale. Louie uses a perpetual inventory system.
2. Make the journal entry necessary on August 17 to record the cash collection.
3. Make the journal entry necessary on August 17 to record the return of the goods.
4. What question exists with respect to the valuation of the returned inventory?