Question

Myers and Company sold $1,800 of merchandise on account to Oscar, Inc. on March 1 with credit terms of 2/10, n/30. Oscar returned $500 of the merchandise due to poor quality on March 3. If Oscar pays for the purchase on March 11, what entry does Myers make to record receipt of the payment?A. Cash 1,800Sales Discount 36Accounts Receivable 1,764B. Cash 1,764Accounts Receivable 1,764C. Cash 1,800Sales Returns and Allowances 500Accounts Receivable 1,300D.Cash 1,274Sales Discount 26Accounts Receivable 1,300

Answer 1

To record Oscar, Inc.'s payment, Myers and Company would debit Cash for $1,300 and credit Accounts Receivable for $1,300, reflecting the payment after a $500 return and without any sales discount due to the payment being made after the discount period.

Step-by-step explanation:

The correct journal entry to record the receipt of payment from Oscar, Inc. on March 11th, given the original sale of $1,800 on account with credit terms of 2/10, n/30 and a subsequent return of $500 worth of merchandise would be to debit the Cash account and credit the Accounts Receivable account for the net amount after considering the returned merchandise.

The $500 return would reduce the balance owed to Myers and Company to $1,300 ($1,800 - $500). Since Oscar is paying after the discount period has expired (after 10 days), there is no sales discount to apply. Therefore, the full amount of $1,300 would be recorded.

The correct journal entry would be:

• Debit Cash $1,300
• Credit Accounts Receivable $1,300

Answer 2

D.Cash 1,274 Sales Discount 26 Accounts Receivable 1,300

Step-by-step explanation:

The journal entry is shown below:

Cash A/c Dr $1,274

Sales Discount A/c Dr $26

To Accounts receivable $1,300

(Being cash received recorded)

The computation of the account receivable

= Credit sales - returned goods

= $1,800 - $500

= $1,300

And, the discount would be

= Accounts receivable × percentage given

= $1,300 × 2%

= $26

The remaining amount would be credited to the cash account.