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. On October 4, Carter returns some of the merchandise. The selling price of the merchandise is $500 and the cost of the merchandise returned is $350. Carter pays the invoice on October 8, and takes the appropriate discount. The journal entry that Courtland makes on October 8 is:

Question

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Courtland Company will record the receipt of cash from Carter Company after deducting the sales return and applying the discount. The net sales amount after the return is $5,300 ($5,800 - $500). Carter pays within the discount period, so a 2% discount is applied to $5,300, resulting in a discount of $106. The cash received is $5,194 ($5,300 - $106). The journal entry will debit Cash for $5,194, debit Sales Discounts for $106, and credit Accounts Receivable for $5,300.

On October 1, Courtland Company Sold Merchandise in the Amount