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

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