Question

On December 1, Macy Company sold merchandise with a selling price of $9,000 on account to Mrs. Jorgensen, with terms 4/10, n/30. On December 3, Mrs. Jorgensen returned merchandise with a selling price of $700. Mrs. Jorgensen paid the amount due on December 9. What journal entry did Macy Company prepare on December 9 assuming the gross method is used?
A) Debit Cash for $7,968 and credit Accounts Receivable for $7,968.
B) Debit Sales Revenue for $7,968, debit Sales Discounts for $332, and credit Accounts Receivable for $8,300.
C) Debit Sales Revenue for $8,300, credit Sales Discount for $332 and credit Cash for $7,968.
D) Debit Cash for $7,968, debit Sales Discounts for $332, and credit Accounts Receivable for $8,300.

Answer 1

Answer:

B) Debit Sales Revenue for $7,968, debit Sales Discounts for $332, and credit Accounts Receivable for $8,300.

Explanation:

The journal entry is shown below:

Cash A/c Dr                   $7,968

Sales Discount A/c Dr $332

     To  Accounts receivable    $8,300

(Being cash received recorded)

The computation of the account receivable  

= Credit sales - returned goods

= $9,000 - $700

= $8,300

And, the discount would be

= Accounts receivable × percentage given

= $8,300 × 4%

= $332

The remaining amount would be credited to the cash account.