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11 December, 08:02

Metlock, Inc. sells merchandise on account for $2000 to Morton Company with credit terms of 2/8, n/30. Morton Company returns $600 of merchandise that was damaged, along with a check to settle the account within the discount period. What entry does Metlock, Inc. make upon receipt of the check?

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  1. 11 December, 08:24
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    The journal entry is shown below:

    Cash A/c Dr $1,372

    Sales Returns and Allowances A/c Dr $600

    Sales Discounts A/c Dr $28

    To Accounts Receivable A/c $2,000

    (Being the cash is received)

    The computation is shown below:

    For sales discount

    = (Sales value of merchandise - returned goods) * discount rate

    = ($2,000 - $600) * 2%

    = $28

    And, the remaining balance is debited to the cash account
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