A company sold merchandise for $20,000 on account with terms of 3/10, n/30. The company uses a perpetual inventory system. After two days, it received defective merchandise worth $2,000. The journal entry to record the cash receipt for sale if the payment is received within 10 days of the invoice date would include:
A)a debit to Cash for $17,460, a credit to Merchandise Inventory for $540, and a credit to Sales Revenue for $18,000.
B)a debit to Cash for $17,460, a debit to Sales Discount for $540, and a credit to Accounts Receivable for $18,000.
C)a debit to Cash for $18,000, a debit to Merchandise Inventory for $2,000 and a credit to Accounts Receivable.
D)a debit to Sales for $20,000, a credit to Accounts Receivable for $20,000, and a credit to Sales Discount for $2,000.

Question

Quizplus · Accepted Answer

The correct entry accounts for the sales discount of 3% on the net amount after the return ($18,000), resulting in a $540 discount. The cash received is $17,460, and the accounts receivable is credited for the net amount of $18,000.

A Company Sold Merchandise for $20,000 on Account with Terms