Consider the following facts: - Company A sells merchandise on account for $3,00

Question

Consider the following facts:

- Company A sells merchandise on account for $3,000 to Company C

- The credit terms of the sale are 2/10, n/30

- Company C returns $450 of the merchandise

- Company C pays the outstanding balance within the discount period

Which of the following is true about the journal entry, Company A will make when Company C pays?

a. Sales Discounts will debited for $51

b. None of these answers are correct

c. Cash will be debited for $2,550

d.Accounts Receivable will be credited for $2,550

e. Sales Returns and Allowances will be debited for $501

Explanation / Answer

On Sales.

Accounts Receivable             3,000

            To   Sales                                  3,000

on sales return

Sales return                     450

            To Accounts receivable                 450

on receipt of money

Cash                 2,499

Sales discount                              51

          To   Accounts receivable                     2,550

Following two statements are correct:

a. Sales discount will debited $ 51

d.Accounts receivable will be credited $ 2,550

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