On 5 September, De La Hoya Ltd buys inventories on account from Junot Ltd. The selling price of the goods is \($1500,\) and the cost to Junot Ltd was \($800.\) Due to an error in filling the order, incorrect goods with a selling price of \($200\) and a cost of \($80\) are returned on 8 September. Prepare journal entries to record these transactions for each entity. Reasoning Under a perpetual inventory system the purchaser will record goods at cost. The seller will record both the sale and the cost of goods sold at the time of the sale. When goods are returned, the purchaser will directly reduce inventory, but the seller will record the return in a contra account, sales returns and allowances.