A company sold merchandise for $4,000 on account with terms of 4/15,n/30.The company uses a perpetual inventory system.Defective merchandise of $200 was returned two days later.If the payment was received after 30 days,the journal entry to record the cash receipt will include ________.
A)a debit to Cash for $3,840 and a credit to Accounts Receivable for $3,840
B)a debit to Cash for $3,800 and a credit to Accounts Receivable for $3,800
C)a credit to Sales Revenue for $3,800 and a debit to Cash for $3,800
D)a credit to Cost of Goods Sold for $4,000 and a debit to Sales Revenue for $4,000

Question

Quizplus · Accepted Answer

The customer is eligible for a 4% discount if they pay within 15 days of the purchase. Therefore, the net amount due will be $4,000 - 4% of $4,000 = $3,840.

When the defective merchandise is returned, the journal entry will be:

Debit: Accounts Receivable $200
Credit: Sales Revenue $200

After the payment is received, the journal entry will be:

Debit: Cash $3,800
Credit: Accounts Receivable $3,800

This reflects the amount the customer owed after deducting the discount, and accounts for the return of defective merchandise.

A Company Sold Merchandise for $4,000 on Account with Terms