Question

On March 1, Marin sold merchandise on account to Amelia Company for $22,400, terms 2/10, net 45. On March 6, Amelia returns merchandise with a sales price of $1,200. On March 11, Marin receives payment from Amelia for the balance due. Prepare journal entries to record the March transactions on Marin’s books. (Ignore cost of goods sold entries and explanations.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Answer 1

Answer:

On March 1,

Debit Receivable Accounts $22,400

Credit Sales $22,400

On March 6

Debit Sales $1,200

Credit Receivable Accounts $1,200

On March 11,

Debit Cash  $20,776

Debit Sales Discount  $424

Credit Accounts Receivable $21,200

Explanation:

On March 1,

Debit Receivable Accounts $22,400

Credit Sales $22,400

On March 6

Debit Sales $1,200

Credit Receivable Accounts $1,200

On March 11,

Credit terms of 2/10, net 45 means that 2% discount for the payment within 10 days or the full amount to be paid within 45 days.

Marin receives payment from Amelia on 11 March, early enough to offer a 2% discount.

The amount of discount: ($22,400 - $1,200) x 2% = $424

The journal entry:

Debit Cash  $20,776

Debit Sales Discount  $424

Credit Accounts Receivable $21,200