Question

On September 12, Ryan Company sold merchandise in the amount of $9,400 to Johnson Company, with credit terms of 2/10, n/30. The cost of the items sold is $5,800. 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 $860 and the cost of the merchandise returned is $530. Johnson pays the invoice on September 18, and takes the appropriate discount. The journal entry that Ryan makes on September 18 is:

Answer 1

Answer:

 Account                                                 Debit                   Credit

 Cash($8540-$170.8=$8369.2)            $8369.2

 Sales Discount ($8540*(2%*$8540))   $170.8

 Account Receivable( $9400 -  $860)                                $8540

Step-by-step explanation:

The journal entries made earlier are:

                              Account                                 Debit                    Credit

On Sep 12:

                  Account Receivable                        $9400

                   Sales revenue                                                               $9400

On Sep 14:

                  Sales Returns                                  $860

                  Account Receivable                                                       $860

On Sep 18:

Now we will calculate the  Account Receivable:

Account Receivable =  $9400 -  $860

Account Receivable =  $8540

Now we will calculate the Sales Discount:

(Discount is 2%)

Sales Discount= $8540*(0.02)

Sales Discount= $170.8

Now we will Calculate the Cash:

Cash= Account Receivable- Sales Discount

Cash=$8540-$170.8

Cash=$8369.2

The journal Entry on Sep 18 is:

            Account                                            Debit                   Credit

      Cash($8540-$170.8=$8369.2)             $8369.2

    Sales Discount ($8540*(2%*$8540))    $170.8

    Account Receivable( $9400 -  $860)                                $8540