Question

On february 3, smart company, inc. sold merchandise in the amount of $5,800 to truman company, with credit terms of 2/10, n/30. the cost of the items sold is $4,000. smart uses the perpetual inventory system. truman pays the invoice on february 8, and takes the appropriate discount. the journal entry that smart makes on february 8 is:

Answer 1

The possible journal entry that would be in Truman's tracking inventory would be:
Cash
4,171
Sales discounts
129
Accounts receivable
4,300

This is because the amount of 5,800 had a credit or an excess amount. Originally the costs of the items are 4,000 and it happened to be increased using the 2/10 and n/30 method of the calculation.