Question

On September 12, Vander Company sold merchandise in the amount of $5,800 to Jepson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Vander uses the periodic inventory system and the gross method of accounting for sales. Jepson pays the invoice on September 18, and takes the appropriate discount. The journal entry that Vander makes on September 18 is:

Answer 1

Answer:

Dr Cash                      $5,684

Dr Sales discount       $116

Cr Accounts receivable              $5,800

Explanation:

The fact that the invoice was settled on September 18, confirms that the payment on the sale of merchandise was received by Vander company during the period,hence Jepson company is entitled to the applicable discount of 2%.

The amount cash received is $5,800*(1-2%)=$5,684.00  

The appropriate journal entries include a debit to cash of $ 5,684, a debit sales discount of $116($5800-$5,684) as well as a credit to account receivables of $5,800