Question

On September 12, Ryan Company sold merchandise in the amount of $9,400 to Johnson Company, with credit terms of 2/10, n/30. The cost of the items sold is $5,800. Ryan uses the periodic inventory system and the net method of accounting for sales. On September 14, Johnson returns some of the merchandise. The selling price of the merchandise is $860 and the cost of the merchandise returned is $530. Johnson pays the invoice on September 18, and takes the appropriate discount. The journal entry that Ryan makes on September 18 is:

Answer 1

Account Debit Credit

Cash($8540-$170.8=$8369.2) $8369.2

Sales Discount ($8540*(2%*$8540)) $170.8

Account Receivable( $9400 - $860) $8540

Explanation:

The journal entries made earlier are:

Account Debit Credit

On Sep 12:

Account Receivable $9400

Sales revenue $9400

On Sep 14:

Sales Returns $860

Account Receivable $860

On Sep 18:

Now we will calculate the Account Receivable:

Account Receivable = $9400 - $860

Account Receivable = $8540

Now we will calculate the Sales Discount:

(Discount is 2%)

Sales Discount= $8540*(0.02)

Sales Discount= $170.8

Now we will Calculate the Cash:

Cash= Account Receivable- Sales Discount

Cash=$8540-$170.8

Cash=$8369.2

The journal Entry on Sep 18 is:

Account Debit Credit

Cash($8540-$170.8=$8369.2) $8369.2

Sales Discount ($8540*(2%*$8540)) $170.8

Account Receivable( $9400 - $860) $8540