ACCT 221 Chapter 5 Purchase and Sales Entries

Credit Purchase of Resale Inventory

Debit Inventory

Credit Accounts Payable

Buyer Pays Freight Costs on a Purchase

Debit Inventory

Credit Cash

Purchase Returns and Allowances

Debit Accounts Payable

Credit Inventory

Payment on Account (within the discount period)

Debit Accounts Payable

Credit Cash

Credit Inventory

Credit Sale of Resale Inventory

Debit Accounts Receivable

Credit Sales Revenue

Debit Cost of Goods Sold

Credit Inventory

Seller Pays Freight Costs on a Sale

Debit Freight-Out Credit Cash

Sales Returns

Debit Sales Returns and Allowances

Credit Accounts Receivable

Debit Inventory

Credit cost of Goods Sold

Receipt of Payment (within the discount period)

Debit Cash

Debit Sales Discounts

Credit Accounts Receivable

Estimated Inventory Returns (end of period adjustment)

Debit Sales Returns and Allowances

Credit Estimated Refund Liability

Debit Estimated Inventory Returns

Credit Cost of Goods Sold