Hummel Medical Suppliers offers customers 1/10, n/30 terms to customers. Hummel

Question

Hummel Medical Suppliers offers customers 1/10, n/30 terms to customers. Hummel ships product to Geriatrics Inc. on March 15th in the amount of $800. Geriatrics Inc. settles the bill on March 20th and takes advantage of the payment terms. If Hummel wishes to track all discounts allowed, which journal entry will correctly reflect the payment? Select one:

a. Dr Cash $792, Dr Sales Discount $8, Cr Accounts Receivable $800

b. Dr Cash $792 Cr Accounts Receivable $792

c. Dr Cash $792, Dr Sales Returns & Allowances $8, Cr Accounts Receivable $800

d. Dr Cash $792, Dr Sales $8, Cr Accounts Receivable $800

Explanation / Answer

a. Dr Cash $792, Dr Sales Discount $8, Cr Accounts Receivable $800 Explanation: Entry for sales Accounts receivable 800 Sales 800 Entry for pyment within discount period Cash 792 Sales Discount 8 (800 x 1%) Accounts receivable 800

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