Question

Q 8.27: Luna Company sold $2,400 of merchandise to Hubbard Incorporated on May 1st with terms 2/10, n/30. On May 6th, Hubbard returned $350 of merchandise and paid in full on May 9th. Journalize the entry for Luna Company on the payment date.

Answer 1

Answer:

The journal entry is shown below:

Explanation:

The journal entry which is to be recorded on the date of payment is as:

Cash A/c...........................................................Dr    $2,009

Sales Discount A/c.........................................Dr    $41

      Accounts Receivable- Hubbard Incorporated A/c..........Cr   $2,050

As the goods sold by company, so they received cash and any increase in assets account is debited. Therefore, the cash account is debited. And the company also offered discount which is also debited and the account of accounts receivable is credited.

Working Note:

Amount of cash received = (Sold merchandise amount - Return goods amount) - 2% on amount

= ($2,400 - $350) - 2% on amount

= $2,050 - 2% × $2,050

= $2,050 - 41

= $2,009