Prepare journal entry assuming that sue black did not remit

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On July 2, 2014, Lake Company sold to Sue Black merchandise having a sales price of $6,000 (cost $3,600) with terms of 2/10. n/30. f.o.b. shipping point. Lake estimates that merchandise with a sales value of $600 will be returned. An invoice totaling $120, terms n/30, was received by Black on July 6 from Pacific Delivery Service for the freight cost. Upon receipt of the goods, on July 3, Black notified Lake that $250 of merchandise contained flaws. The same day, Lake issued a credit memo covering the defective merchandise and asked that it be returned at Lake's expense. Lake estimates the returned items to have a fair value of $100. The freight on the returned merchandise was $20 paid by Lake on July 7. On July 12, the company received a check for the balance due from Black.

Instructions

Problem (a) Prepare journal entries for Lake Company to record all the events noted above assuming sales and receivables are entered at gross selling price.

Problem (b) Prepare the journal entry assuming that Sue Black did not remit payment until August 5.

Reference no: EM132762925

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