Question

Carrie Company sold merchandise with an invoice price of $1,900 to Underwood, Inc., with terms of 3/10, n/30. Which of the following is the correct entry to record the payment by Underwood Inc., within the 10 days if the company uses the periodic inventory system and the gross method to record purchases? Accounts payable 1,900 Cash 1,900 Cash 1,843 Sales discount 57 Accounts receivable 1,900 Accounts payable 1,900 Cash 1,843 Purchases discounts 57 Purchases 1,843 Cash 1,843

Answer 1

Answer:

Cash 1,843 Sales discount 57 Accounts receivable 1,900

Explanation:

The first entry done was the record of the sale on account:

Account Receivable    1,900 debit

  Sales Revenue                               1,900 credit

Then, at the moment of payment within discount period:

we calculate the discount

1,900 x 3$ = 57

We will write-off the account receivable.

Recognize this sales discount

and record the cash collected, whch is the net amount of the sale:

(1,900 gross amount - 57 discount = 1,843 net)

cash                          1,843 debit

sales discount              57 debit

        account receivable    1,900 credit