Prepare the journal entries to record the following transactions on Markowitz Company’s books using a perpetual inventory system. On February 6, Markowitz Company sold $75,000 of merchandise to the Lyman Company, terms 2/10, net /30. The cost of the merchandise sold was $50,000. On February 8, the Lyman Company returned $10,000 of the merchandise purchased on February 6. The cost of the merchandise returned was $5,000. On February 16 Markowitz Company received the balance due from the Lyman Company.

Journal entries for Markowitz Company’s books are given below

Explanation:

February 6

                                  Debit        Credit

Receivable               $75000

Sales                                           $75000

                                              Debit        Credit

Cost of good sold               $50,000

Inventory                                                 $50,000

February 8

                                 Debit           Credit

Sales Return             $10,000

Receivable                                   $10,000

                                     Debit         Credit

Inventory                    $5,000

Cost of good sold                           $5,000

February 16

                                       Debit        Credit

Cash                             $63,700

Sale discount               $1300

Receivable                                      65,000

Workings for february 16

Discount = 65,000 x 2% = 1300

Cash = 65000 x 98% = 63,700

Account Receivable = 75,000 - 10,000 = 65,000

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