On October 1, Courtland Company sold merchandise in the amount of $5,800 to Carter Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Courtland uses the periodic inventory system. Carter pays the invoice on October 8, and takes the appropriate discount. The journal entry that Courtland makes on October 8 is:

Question

Quizplus · Accepted Answer

The correct journal entry for Courtland on October 8, when Carter pays the invoice taking the 2% discount, involves decreasing Accounts Receivable for the full invoice amount ($5,800), recording the sales discount ($116, which is 2% of $5,800), and increasing Cash for the net amount received after the discount ($5,684, which is $5,800 - $116). This reflects the reduction in revenue due to the sales discount and the receipt of cash.

On October 1, Courtland Company Sold Merchandise in the Amount