Final answer:
Meadows Manufacturing would journalize a debit to Cash for $6,076 and a debit to Sales Discounts for $124, and credit Accounts Receivable for $7,200 when Sparta Incorporated makes a payment on September 10th, following a sales allowance of $1,000.
Step-by-step explanation:
The subject of this question is business, specifically focusing on the journal entries related to sales and sales allowances in accounting. The student is asking how to journalize a payment that Sparta Incorporated makes to Meadows Manufacturing after a sales allowance was granted.
When Meadows Manufacturing sells goods to Sparta Incorporated on September 4th with terms 2/15, n/eom, the initial sale is for $7,200. On September 9th, Meadows grants a sales allowance of $1,000. If Sparta makes payment on September 10th, the journal entry for Meadows would include the sales discount since the payment is made within the discount period of 15 days.
The journal entry on September 10th would be:
- Debit Cash: $6,076 [(7,200 - 1,000) x 98%]
- Debit Sales Discounts: $124 [(7,200 - 1,000) x 2%]
- Credit Accounts Receivable: $7,200
This entry reflects the receipt of the remaining amount after the sales allowance and discount are applied.