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Sheffield corporation shipped $20400 of merchandise on a consignment to Gooch company. Sheffield paid frieght cost of $2000. Gooch company paid $480 for local advertising wich is reimbursed from Sheffield . By year end 62% of the merchandise had been sold for $21500.Gooch notified Sheffield , retained a 10% commission , and remitted the cash due Sheffield . Prepare sheffield journal entry when the cash is received

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The appropriate  journal entry when the cash is received is: Debit Cash $18,870, Debit Advertising expense $480, Debit Commission expense $2,150, Credit Revenue from consignment sales $21,500.

Journal entry

Sheffield corporation entries

Debit Cash $18,870

[$21500-($480+ ($21500×10%))]

Debit Advertising expense $480

Debit Commission expense $2,150

(21,500×10%)

Credit Revenue from consignment sales $21,500

Debit Cost of goods sold $13,888

[($20400+$2000)×62%]

Credit Inventory on consignment $13,888

Therefore  journal entry when the cash is received is: Debit Cash $18,870, Debit Advertising expense $480, Debit Commission expense $2,150, Credit Revenue from consignment sales $21,500.

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