Question

19 Sold merchandise that cost $800 to Art Co. for $1,200 under credit terms of 2/15, n/60, FOB shipping point, invoice dated July 19. 21 Gave a price reduction (allowance) of $200 to Art Co. for merchandise sold on July 19 and credited Art's accounts receivable for that amount. 24 Paid Leight Co. the balance due, net of discount. 30 Received the balance due from Art Co. for the invoice dated July 19, net of discount.

Answer 1

Answer:

Accounts Receivables 1200 debit

Sales Revenues  1200 credit

--to record purchase--  

COGS  800 debit

Inventory  800 credit

--to record cost of goods sold  

sales allowance & returns 200 debit

accounts receivables  200 credit

--to record sales allowance--  

Cash                                 980 debit

sales allowance & returns 20 debit

       Accounts receivables        1,000 credit

--to record collection within discount date--

Explanation:

We record making debit = credit

we also consider that we are working with perpetual inventory thus, the discount granted and allowance will later decrease the net sales figure.