Question

Blossom Company sells merchandise on account for $3300 to Morton Company with credit terms of 2/7, n/30. Morton Company returns $800 of merchandise that was damaged, along with a check to settle the account within the discount period. Required:
What entry does Blossom Company make upon receipt of the check?

Answer 1

Assuming Morton Company returns $800 of merchandise  was damaged. The entry that Blossom Company make upon receipt of the check is Debit Cash $2,450; Debit Sales Returns and Allowances $800;Debit Sales Discounts $50;Credit Accounts Receivable $3300.

Journal entry

Blossom company

Debit Cash $2,450

($3300-$800)-[(3300 - 800 )×2%]

Debit Sales Returns and Allowances $800

Debit Sales Discounts $50

[(3300 - 800 )×2%]

Credit Accounts Receivable $3300

Inconclusion the entry that Blossom Company make upon receipt of the check is Debit Cash $2,450; Debit Sales Returns and Allowances $800;Debit Sales Discounts $50;Credit Accounts Receivable $3300

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