Question - Presented below are transactions related to Stealer's Company.
1. On December 3, Stealer's Company sold $400,000 of merchandise to Sharif Co., terms 2/10, n/30, FOB shipping point. The cost of the merchandise sold was $240,000.
2. On December 8, Sharif Co. was granted an allowance of $19,000 for merchandise purchased on December 3.
3. On December 13, Stealer's Company received the balance due from Sharif Co.
Instructions:
(a) Prepare the journal entries to record these transactions on the books of Stealer's Company using a perpetual inventory system.
(b) Assume that Stealer's Company received the balance due from Sharif Co. on January 2 of the following year instead of December 13. Prepare the journal entry to record the receipt of payment on January 2.
(c) 1) what is the difference between a Sales Return and a Sales Allowance? 2) How would the journal entry on December 8 be different if it was a Sales Return instead of a Sales Allowance?