Answer:
The answer is: Nash's Trading Post should record the following entries
- Cr Accounts receivable $1,200
- Dr $686 Cash
- Dr $14 Sales discount
- Dr $500 returned merchandise (damaged)
Explanation:
The credit terms of 2/7, n/30 means that if Morton Company pays within seven days, they will get a 2% discount, or they have thirty days to pay the full receipt.
Morton's check should be for
($1,200 - $500) x 0.98% = $700 x 0.98% = $686
Nash's Trading Post should record the following entries
Cr Accounts receivable $1,200
Dr $686 Cash
Dr $14 Sales discount
Dr $500 returned merchandise (damaged)
