Question

On January 6, Blossom Co. sells merchandise on account to Pryor Inc. for $10,300, terms 4/10, n/30. On January 16, Pryor Inc. pays the amount due. Prepare the entries on Blossom’s books to record the sale and related collection. (Omit cost of goods sold entries.)

Answer 1

Answer:

Explanation:

Blossom Co.

Journal Entry

Date                 Particulars                      Debit            Credit

6 Jan            Accounts Receivable     $10300

                            Sale                                                   $ 10300

Blossom Co. sells merchandise on account to Pryor Inc. for $10,300, terms 4/10, n/30.

16 Jan                 Cash                         $9888

                           Discount Allowed      412

                                Accounts Receivable                $ 10300

The terms 4/10,n/30 means that 4% discount is allowed with in the first ten days of sale. As payment is made on 16 Jan which is the tenth day of Sale the discount is calculated as 4% of 10300=   $ 412.  

The cash received would be $ 10300- $ 412= $ 9888