contestada

On Dec. 20, X-Mart received a $100 allowance because the merchandise it purchased on account, earlier in the month, was of poor quality. Demonstrate the required journal entry on X-Mart's books for the allowance assuming the perpetual inventory method.

Respuesta :

jafruevu

Answer:

See explanation section

Explanation:

The journal entry to record the $100 received as allowance because of the poor quality product is as follows:

Debit     Accounts payable                                 $100

Credit    Inventory/Merchandise Inventory       $100

Since the X-mart company purchased the inventory on account, the supplier became payable for X-mart. Therefore, he made a journal entry with a payable account as credit. As the X-mart company now returned the defective goods due to poor quality, the supplier will get less amount. Therefore, it (supplier - a payable) becomes a debit. As X-mart returned the product, the inventory becomes a credit.