Question

Myers and Company sold $1,800 of merchandise on account to Oscar, Inc. on March 1 with credit terms of 2/10, n/30. Oscar returned $500 of the merchandise due to poor quality on March 3. If Oscar pays for the purchase on March 11, what entry does Myers make to record receipt of the payment?A. Cash 1,800Sales Discount 36Accounts Receivable 1,764B. Cash 1,764Accounts Receivable 1,764C. Cash 1,800Sales Returns and Allowances 500Accounts Receivable 1,300D.Cash 1,274Sales Discount 26Accounts Receivable 1,300

Answer 1

Answer:

D.Cash 1,274 Sales Discount 26 Accounts Receivable 1,300

Explanation:

The journal entry is shown  below:

Cash A/c Dr                   $1,274

Sales Discount A/c Dr $26

     To  Accounts receivable    $1,300

(Being cash received recorded)

The computation of the account receivable  

= Credit sales - returned goods

= $1,800 - $500

= $1,300

And, the discount would be

= Accounts receivable × percentage given

= $1,300 × 2%

= $26

The remaining amount would be credited to the cash account.