You sell merchandise on account for $12,900. The merchandise cost you $7,700. The terms are FOB shipping, 2/10, n/30. You receive a bill from UPS for $210 for transportation costs. The customer takes advantage of the sales discount when he pays you. Record the following transactions.
Journal
Date | Account title | Debit | Credit |
i) | Accounts receivables | 12,900 | |
Sales | 12,900 | ||
ii) | Cost of goods sold | 7,700 | |
Merchandise inventory | 7,700 | ||
iii) | Cash | 12,642 | |
Sales discount | 258 | ||
Accounts receivable | 12,900 |
Discount amount = 12,900 x 2/100
= $258
Cash to be received = Final payment due - discount amount
= 12,900 - 258
= $12,642
When the terms are FOB Shipping, freight is paid by the buyer.
Kindly comment if you need further assistance. Thanks
You sell merchandise on account for $12,900. The merchandise cost you $7,700. The terms are FOB...
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