Record the following transactions on the books of Crane Co. (Omit cost of goods sold entries.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) (a) On July 1, Crane Co. sold merchandise on account to Stacey Inc. for $23,380, terms 3/10, n/30. (b) On July 8, Stacey Inc. returned merchandise worth $3,380 to Crane Co. (c) On July 11, Stacey Inc. paid for the merchandise.

a. July 1     Accounts Receivable       $23380 Dr

                            Sales Revenue              $23380 Cr

b. July 8  Sales Returns                          $3380 Dr

                    Accounts Receivable                $3380 Cr

c. July 11   Cash                                       $20000 Dr

                       Accounts Receivable           $20000 Cr

Explanation:

a.

The sales are made on credit so the accounts receivable will be debited and the sales revenue will be credited. Assuming that we are using the gross method to record sale, we will record the sale at the invoice price as quoted and will not record it at net of discount amount.

b.

The sales returns are made on July 8 which will reduce the sales revenue. We do this by opening a contra account to sales revenue which is of Sales returns. The increase in sales returns will be debited to this account and the accounts receivable will be reduced and credited by the amount of return made.

c.

As the sales term are 3/10 n/30 which means a 3% discount if payment for credit sales is made within 10 days of sale and the credit term is 30 days. The Crane Co. received the payment from accounts receivable on July 11 which is after the discount period has ended. Thus the accounts receivable will pay the full amount outstanding which is (23380 - 3380) = $20000.

2,283,000

explanation:

i just had to add it

the answer is "b.the increased supply will create a surplus. "

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