Question

Question Help On December 1. Macy Company sold merchandise with a selling price of $9,000 on account to Mrs. Jorgensen, with terms 4/10, 1/30. On December 3, Mrs. Jorgensen returned merchandise with a selling price of $700. Mrs. Jorgensen paid the amount due on December 9. What journal entry did Macy Company prepare on December 9 assuming the gross method is used? O A. Debit Cash for $7.968 and credit Accounts Receivable for $7.968 O B. Debit Sales Revenue for $8,300, credit Sales Discount for $332 and credit Cash for $7,968 O C. Debit Cash for $7.968, debit Sales Discounts for $332, and credit Accounts Receivable for $8,300 OD. Debit Sales Revenue for $7.968, debit Sales Discounts for $332, and credit Accounts Receivable for $8,300

Answer 1

Solution :-

Total Selling Price = $ 9000

Less :Goods Returned = $ 700

Net Selling Price = $ 8300

Net Selling Price = $ 8300

Less : Sales Discount (W Note 1) = $ 332

Cash Received = $ 7968

Journal Entry assuming Gross ,method is Used :-

Cash A/c Dr 7968

Sales Discount Dr 332

To Account Receivable A/c $ 8300

W Note 1 Calculation Of Sales Discount :-

Company Sells Merchandise with Terms of 4/10 n/30 which means if the payment is received within 10 Days , Then sales Discount of 4% is allowed. Macy Company sold goods on December 1 and payment is received on December 9 , Therefore 4% Discount is allowed on Net Selling Price.

Sales Discount = $ 8300 * 4% = $ 332

Since the Gross Method is used , therefore sales discount will be shown in the books of accounts.