On October 5, Cullumber Company buys merchandise on account from Oriole Company. The selling price of the goods is $6,370, and the cost to Oriole Company is $3,420. On October 8, Cullumber Company returns defective goods with a selling price of $680 and a scrap value of $440.

Record the transactions of Cullumber Company, assuming a perpetual approach.

On October 5

Debit Accounts receivable  $6,370

Credit Sales Revenue          $6,370

Debit Cost of goods sold     $3,420

Credit inventory account      $3,420

October 8

Debit Sales Revenue (Sales return) $680

Credit Accounts receivable              $680

Debit Inventory account    $440

Credit  Cost of goods sold  $440

Explanation:

When goods are on account, the entries required are

Debit Accounts receivable

Credit Sales Revenue

To record the amount made from sales. Furthermore, there is a reduction in inventory. This will also be accounted for by

Debit Cost of goods sold

Credit inventory account

When returns are made, the debits and credits above are reversed.

1. avoid them

2. a talk with them

3. ask someone you trust

4. ignore

5. call police