Question

On September 12, Ryan Company sold merchandise in the amount of $5,800 to Johnson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Ryan uses the periodic inventory system and the net method of accounting for sales. The journal entry or entries that Ryan will make on September 12 is (are):

Answer 1

Ryan Company would make multiple journal entries including debiting Accounts Receivable, Sales Revenue, Cost of Goods Sold, and Sales Discount.

Step-by-step explanation:

On September 12, Ryan Company sold merchandise to Johnson Company for $5,800 with credit terms of 2/10, n/30. The cost of the items sold was $4,000. Since Ryan uses the periodic inventory system and the net method of accounting for sales, the journal entry for this transaction would be as follows:

1. Debit Accounts Receivable - Johnson Company for $5,800
2. Credit Sales Revenue for $5,800
3. Debit Cost of Goods Sold for $4,000
4. Credit Merchandise Inventory for $4,000
5. Debit Sales Discount for $116 (2% of $5,800)
6. Credit Accounts Receivable - Johnson Company for $116

Answer 2

Debit Credit

Accounts Receivable 5,684

Sales 5,684

Step-by-step explanation:

The credit terms 2/10, n/30 means that there is a 2% discount if the customer pays in ten days or less and if not, will have to pay the price given. The net method implies registration of all the sales as if the customer would pay in the discount period.

Sales: $5,800 x (1 - 0.02) = $5,684

For the cost of goods sold the company uses the periodic inventor system so there is no registration to make in this sale.