PROBLEM#!--Cash Discount On April 3, we received an invoice from the J. Miller C

Question

PROBLEM#!--Cash Discount On April 3, we received an invoice from the J. Miller Company for $3,500. The terms are 2/10;n/30 A) If we pay the bill on April 10h, how much must we pay? B) If we pay the bill on April 16, how much must we pay? C) If we pay $1,000 on April 9h and they allow a discount on partial payments, how much will they subtract from our debt to them? PROBLEM #2 Journal Entries e the following entries. Use the accounts given. Ignore sales taxes. Our sales terms ar 3/10;n/30. We allow a discount on partial payments. April 1 We sell $8,000 worth of merchandise on account to J. Baecker. April 2 We sell $6,000 worth of merchandise on account to D. Crampton. April 6 We sell $15,000 worth of merchandise on account to L. Rundquist April 8 We have cash sales of $9,000. April 9 we have bank credt card sales of $7,000. The fee charged by the bank is 296. April 10 J. Baecker pays us in full for the merchandise purchased on April 1. April 11 D. Crampton pays us $4,000 for the merchandise purchased on April 2. April 22 we sell $3,000 worth of merchandise on account to O. Shokunb. April 24 E. Conrad returns $500 worth of merchandise purchased on April 22. April 29 L. Rundquist pays us in full for the merchandise purchased on April 6. April 30 O. Shokunbi pays us in full for the merchandise purchased on April 24. Accounts to be used: Accounts Receivable Cash Credit Card Discount Sales Sales Discount Sales Returns and Allowances

Explanation / Answer

A)

If payment is on 10th then 2% discount will be given

Hence payment=Debt-discount

=$3,500-($3,500*2%)

=$3,430

B)

If payment is on 16th then 2% discount willnot be given

Hence payment=Debt

=$3,500

C)

Debt will be reduced=$1,000*2%

=$20

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