Question

On June 15, Oakley Inc. sells inventory on account to Sunglass Hut (SH) for $1,000, terms 2/10, n/30. On June 20, SH returns to Oakley inventory that SH had purchased for $300. On June 24, SH completely fulfills its obligation to Oakley by making a cash payment. What is the amount of cash paid by SH to Oakley

Answer 1

$686

Step-by-step explanation:

the journal entries necessary to record the sale:

June 15, inventory sold on account to Sunglass Hut, terms 2/10, n/30

Dr Accounts receivable 1,000

Cr Sales revenue 1,000

June 20, partial return of purchase from Sunglass Hut

Dr Sales returns and allowances 300

Cr Accounts receivable 300

June 24, invoice is paid within discount period

Dr Cash 686

Dr Sales discounts 14

Cr Accounts receivable 700