Let's Dive into Acme Marine Supply's Journal Entries!

What transactions did Ivanhoe Marine Company have with Acme Marine Supply Company?

How did Acme Marine Supply record these transactions in its journal entries?

Transactions between Ivanhoe Marine and Acme Marine

Acme Marine Supply Company had several transactions with Ivanhoe Marine Company:

• On June 4, Ivanhoe Marine Company purchased $3,000 of merchandise from Acme Marine Supply Company on credit.
• On June 13, Ivanhoe Marine returned $660 of goods to Acme Marine Supply for full credit.
• On the same day, Ivanhoe Marine paid the remaining account balance in full to Acme Marine Supply.

Journal Entries by Acme Marine Supply

Acme Marine Supply accurately recorded these transactions in its journal entries as follows:

1. On June 4:
   • Debit Accounts Receivable (Ivanhoe Marine) = $3,000
   • Credit Sales = $3,000
2. On June 13:
   • Debit Sales Returns and Allowances = $660
   • Credit Accounts Receivable (Ivanhoe Marine) = $660
3. On June 13:
   • Debit Cash = $2,700
   • Credit Accounts Receivable (Ivanhoe Marine) = $2,700

Explanation:

1. On June 4, Acme Marine recorded the sale of merchandise to Ivanhoe Marine, debiting the Accounts Receivable and crediting Sales.
2. On June 13, the return of goods by Ivanhoe Marine was recorded by debiting Sales Returns and Allowances and crediting Accounts Receivable.
3. On the same day, Ivanhoe Marine's payment was recorded by debiting Cash and crediting Accounts Receivable.