Question

Sheffield Corp. sells merchandise on account for $2700 to with credit terms of 2/10, n/30. Splish Brothers Inc. returns $600 of merchandise that was damaged, along with a check to settle the account within the discount period. What entry does Sheffield Corp. make upon receipt of the check

Answer 1

Debit Bank for $2,058, Purchase Return for $600, and Discount allowed for $42; while Credit Accounts receivable for $2,700.

Step-by-step explanation:

Sales after return before discount = $2,700 - $600 = $2,100

Discount allowed = $2,100 * 2% = $42

Check amount = $2,100 - $42 = $2,058

This implies that $2,058 is received in cash and the journal entries upon receipt of check will be as follows:

Details Dr ($) Cr ($)

Bank 2,058

Discount allowed 42

Purchases return 600

Accounts receivable 2,700

To record check received from and discount allowed to Splish Brothers Inc.