Question

Heidi’s Accessories bought 50 necklaces for $10 each on account. The invoice included a 6% sales tax and payment terms of 2/10, n/30. Five necklaces were returned prior to payment. The entry to record the payment (within the discount period) would include a credit to

A. Cash for $477.
B. Cash for $468.
C. Accounts Receivable for $477.
D. Accounts Receivable for $468.

Answer 1

Hi there
Since 5 necklaces were returned before the payment, then actual payment is
45×10
=450
included a 6% sales tax
450+450×0.06
=477
within the discount period
477−477×0.02
=468

So the answer is
D. Accounts Receivable for $468.

Good luck!