A company sold merchandise for $24,000 on account with terms of 5/15,n/30.The company uses a perpetual inventory system.After two days,it received defective merchandise worth $4,000.The journal entry to record the cash receipt for the sale if the payment is received within 10 days of the invoice date would include ________.

Question

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The terms 5/15,n/30 mean that the buyer can take a 5% discount if the payment is made within 15 days, otherwise, the full amount is due in 30 days. Therefore, if the payment is received within 10 days, the buyer can take the discount, which is 5% of $24,000 or $1,200. Thus, the cash receipt would be $24,000 - $1,200 = $22,800.

The journal entry to record the cash receipt would be:

Debit Cash $22,800 
Debit Sales Discount $1,200 ($24,000 x 5%) 
Credit Accounts Receivable $24,000

There is no mention of the defective merchandise being returned or refunded, so it is not included in the journal entry. The Merchandise Inventory account is also not affected because the transaction is a cash sale, and the perpetual inventory system updates the inventory account only when merchandise is purchased or sold on credit.

A Company Sold Merchandise for $24,000 on Account with Terms