Question

On September 12, Vander Company sold merchandise in the amount of $2,700 to Jepson Company, with credit terms of 2/10, n/30. The cost of the items sold is $1,865. Vander uses the periodic inventory system and the gross method of accounting for sales. On September 14, Jepson returns some of the merchandise. The selling price of the merchandise is $230 and the cost of the merchandise returned is $160. Jepson pays the invoice on September 18, and takes the appropriate discount. The journal entry that Vander makes on September 18 is:

Answer 1

The journal entry that Vander makes on September 18 is:

Cash $2,421 (debit)

Discount allowed $49 (debit)

Account Receivables : Jepson Company $2,470 (credit)

Step-by-step explanation:

When Vander Company sales Merchandise :

Cost of Sales $1,865 (debit)

Account Receivables :Jepson Company $2,700 (debit)

Merchandise $1,865 (credit)

Sales Revenue $2,700 (credit)

When Jepson returns some of the merchandise

Merchandise $160 (debit)

Sales Revenue $230 (debit)

Cost of Sales $160 (credit)

Account Receivables :Jepson Company $230 (credit)

When Jepson pays the invoice on September 18

Note : Payment is made within the discount period and thus eligible for the 2% cash discount.

Also not that amount settled is less other returns made by the customer

Cash $2,421 (debit)

Discount allowed $49 (debit)

Account Receivables :Jepson Company $2,470 (credit)