On September 12, Ryan Company sold merchandise in the amount of $9,400 to Johnson Company, with credit terms of 2/10, n/30. The cost of the items sold is $5,800. Ryan uses the periodic inventory system and the net method of accounting for sales. On September 14, Johnson returns some of the merchandise. The selling price of the merchandise is $860 and the cost of the merchandise returned is $530. Johnson pays the invoice on September 18, and takes the appropriate discount. The journal entry that Ryan makes on September 18 is:
Accepted Solution
A:
Answer: Account Debit Credit Cash($8540-$170.8=$8369.2) $8369.2 Sales Discount ($8540*(2%*$8540)) $170.8 Account Receivable( $9400 - $860) $8540Step-by-step explanation:The journal entries made earlier are: Account Debit CreditOn Sep 12: Account Receivable $9400 Sales revenue $9400On Sep 14: Sales Returns $860 Account Receivable $860On Sep 18:Now we will calculate the Account Receivable:Account Receivable = $9400 - $860Account Receivable = $8540Now we will calculate the Sales Discount:(Discount is 2%)Sales Discount= $8540*(0.02)Sales Discount= $170.8Now we will Calculate the Cash:Cash= Account Receivable- Sales DiscountCash=$8540-$170.8Cash=$8369.2The journal Entry on Sep 18 is: Account Debit Credit Cash($8540-$170.8=$8369.2) $8369.2 Sales Discount ($8540*(2%*$8540)) $170.8 Account Receivable( $9400 - $860) $8540