Okay.
You don't want to overstate your cost of inventory
that you have sold
because now this $2,000 of worth--
So, $2,000 is your markup of the cost of $1250.
$1250 is your actual cost that you spend buying that inventory,
which you sold for $2,000.
It was part of the journal entry that happened on the 20th
when you make a sale on ticket number 53
for total of $3,000 worth.
So, what happened in transaction I on the 24th
is that Penny, your customer, returned $2,000
of merchandise that cost you $1,250.
So, you want to credit Penny's account,
so you go to your subsidiary ledger.
You look for Penny.
And now, this is on page number three. [computer chimes]
of the general ledger.
And this is transaction I, okay?
And what you want to do is, you want to show--
or in the quick explanation that you can say is this um, um, issue--
Oops.
Credit memo #1.
So, usually when you issue credit memo to a customer,
it usually means that you've given credit back
and they have returned the goods to you,
or you go ahead and just give them credit without,
um, having the goods return to you.
Okay, in this case, it was $2,000
that you credit the customer.
So, this customer no longer owe you $3,800
because they have received
a $2,000 credit of goods that they have returned to you.
Okay?
So, that's your I.
And now, as we go down,
there's also something on the 26th for J.
We receive cash from Penny
in payment of March 20th ticket number 53.
And here's a little hint:
don't forget about the credit memo and discount.
Well, originally the transaction happened on the 20th.
The terms of sale is 4/10.
So, if Penny paid within ten days,
she gets 4% discount, right?
But Penny, on the 24th,
also returned $2,000 worth of goods.
So, in this journal entry you definitely going to get some cash back.
You're also going to debit sales discount,
which, just like sales return and allowances,
the normal side's on the debit side.
If we do sales revenue, it's a contra sales revenue account.
You are also going to credit accounts receivable for Penny.
Now, first of all,
if you look at your subsidiary ledger really quickly,
the ticket number 53 was $3,000.
The credit was $2000.
So, for this transaction alone on ticket 53,
it is only $1,000 worth that Penny owe.
Be really careful and read through the description
or the instruction.
In the instruct-- instruction for J,
you receive cash from Penny in payment of March 20th.
sales ticket number 53.
There was nothing that stated
that Penny is including payment of this $800,
the beginning balance that you carry over.
So, right now, in terms of only looking at ticket 53,
there was-- it was originally for sales of $3,000.
$2000 has been returned to you.
So, what you need to make sure you do is that
there's only $1,000 owed
by customer Penny on ticket number 53.
Okay, so pay attention to what the instructions tell you.
If the instructions tell you,
"Received cash from Penny for sales ticket 53
"plus um...um, balance owed from previous month,"
then you would use this particular balance of $1800.
But in this case, you're only doing $1,000.
So, the accounts receivable is $1,000
that you want to credit.
And sales discount
is going to be calculated by $3000--
that's the original transaction that happened on the 20th--
minus $2,000
that Penny returned,
times 4%.
Okay?
So, the amount would be $1,000 times 40-- 40 [chuckles]
4%: that's $40.
And so, the cash that you receive will be $1000
minus the sales discount of $40.
Okay? So, that's how you would debit cash,
debit sales discount, and credit that $1,000.
So, you credit $1,000, and this was transaction J,
and you're paying off, umm...
You're paying with discount for ticket number 53.
Okay?
So now, the balance that Penny owes
is going to be $800,
the balance that was carried over from the previous month.
For whatever reason, Penny has not yet paid that previous balance.
Penny just make payment on her current transaction this month, okay?