On October 1, A-Company sold merchandise in the amount of $6,500 to B-Company, t

Question

On October 1, A-Company sold merchandise in the amount of $6,500 to B-Company, terms 2/10, n/30. The items cost A-Company $4,200. On October 4, B-Company returns some of the merchandise. This merchandise had a selling price of $500 and a cost of $200. On October 8,   B-Company paid A-Company the correct amount due.   

What is the journal entry that A-Company makes on October 8 to record the receipt of payment from B-Company?

Cash 6,500

              Accounts Receivable      6,500

Cash 5,880

Sales Discount 120        

              Accounts Receivable      6,000

Cash 5,880

              Sales Discount 120

              Accounts Receivable      5,760

Cash 6,000

              Accounts Receivable      6,000

Explanation / Answer

Cash 5880 Sales Discount 120           Accounts Receivable 6000 Option 2 is correct

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