4.  On July 2, 20X1, ABC Company sold to DEF merchandise having a sales price of €8,000 (cost €3,200) with terms of 2/10. n/30. f.o.
(B) shipping point. ABC estimates that merchandise with a sales value of €800 will be returned. An invoice totaling €80, terms n/30, was received by DEF on July 6 from PQR Delivery Service for the freight cost. Upon receipt of the goods, on July 3, DEF notified ABC that €300 of merchandise contained flaws. The same day, ABC issued a credit memo covering the defective merchandise and asked that it be returned at ABC’s expense. ABC estimates the returned items to have a fair value of €60. The freight on the returned merchandise was €30 paid by ABC on July 7. On July 12, the company received a check for the balance due from DEF.
Instructions
Prepare journal entries for ABC Company to record all the events noted above assuming sales and
receivables are entered at gross selling price.