Question

On September 12, Vander Company sold merchandise in the amount of $8,600 to Jepson Company, with credit terms of 2/10, n/30. The cost of the items sold is $5,400. Jepson uses the periodic inventory system and the gross method of accounting for purchases. Jepson pays the invoice on September 18, and takes the appropriate discount. The journal entry that Jepson makes on September 18 is:

Answer 1

Answer:

The journal entry that Jepson makes on September 18 is:

Account Payable ; Vander Company $8,600 (debit)

Discount Received $172(credit)

Cash $8,428 (credit)

Explanation:

When Vander Company sales to Jepson Company, the following entries will be recorded :

Cost of Sales $5,400 (debit)

Account Receivable : Jepson Company $8,600 (debit)

Merchandise $5,400 (credit)

Sales Revenue $8,600 (credit)

When Jepson pays the invoice on September 18, they settle their account within the discount period and is granted a Cash discount of 2%.

The Entry to be made is as follows in Vander Company  :

Cash $8,428 (debit)

Discount Allowed $172 (debit)

Account Receivable : Jepson Company $8,600 (credit)

The Entry to be made is as follows in Jepson Company  :

Account Payable ; Vander Company $8,600 (debit)

Discount Received $172(credit)

Cash $8,428 (credit)

Conclusion :

The journal entry that Jepson makes on September 18 is:

Account Payable ; Vander Company $8,600 (debit)

Discount Received $172(credit)

Cash $8,428 (credit)