On September 12,Ryan Company sold merchandise in the amount of $5,800 to Johnson Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,000.
-Ryan uses the periodic inventory system and the net method of accounting for sales.On September 14,Johnson returns some of the merchandise.The selling price of the merchandise is $500 and the cost of the merchandise returned is $350.Johnson pays the invoice on September 18,and takes the appropriate discount.The journal entry that Ryan makes on September 18 is:

Question

Quizplus · Accepted Answer

The journal entry that Ryan makes on September 12 is:
Accounts Receivable 5,800
Sales Revenue 5,800
(To record credit sale)

The journal entry that Ryan makes on September 14 to record the return is:
Sales Returns and Allowances 500
Accounts Receivable 500
(To record merchandise return)

Cost of goods sold 350
Inventory 350
(To record the cost of the merchandise returned)

On September 18, Johnson pays the invoice taking the appropriate discount of 2% (2% of $5,800 = $116). Therefore, the payment amount is $5,684 ($5,800 - $116).

The journal entry that Ryan makes on September 18 to record the payment is:
Cash 5,684
Sales Discount 116
Accounts Receivable 5,800
(To record payment from Johnson Company, taking discount)

The correct answer is B, which represents the journal entry made on September 18 to record the payment.

On September 12,Ryan Company Sold Merchandise in the Amount of $5,800