Teal Mountain Company Transactions: Journal Entries Consultation

What are the transactions involved in Teal Mountain Company's dealings with Sandhill Co.?

How should Teal Mountain record the sales of merchandise, allowance granted, and balance received from Sandhill Co.?

Journal Entries for Teal Mountain's Transactions

The transactions between Teal Mountain Company and Sandhill Co. consist of sales of merchandise, allowance granted, and receiving the remaining balance.

Teal Mountain Company engaged in several transactions with Sandhill Co. that need to be properly recorded in the journal. The first transaction involved the sale of merchandise on account to Sandhill Co. The journal entry for this transaction would include debiting accounts receivable for the total sales amount and crediting sales for the same amount. Additionally, the cost of goods sold and inventory should be adjusted accordingly.

The second transaction is the allowance granted to Sandhill Co. from Teal Mountain Company. This allowance should be recorded by debiting sales returns and allowances and crediting accounts receivable for the specified amount.

Lastly, the third transaction involves receiving the balance due from Sandhill Co. The journal entry for this transaction would include debiting cash for the remaining balance after the allowance adjustment and crediting accounts receivable for the same amount.

It is essential for Teal Mountain Company to accurately record these transactions to maintain proper financial records and transparency in their dealings with Sandhill Co.