On February 3, Smart Company sold merchandise in the amount of $5,800 to Truman Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Smart uses the perpetual inventory system and the gross method. Truman pays the invoice on February 8, and takes the appropriate discount. The journal entry that Smart makes on February 8 is:a. Cash 5,684Sales discounts 116Accounts receivable 5,800b. leash : Accounts receivable5,6841 : 5,6841C. I Cash: Accounts receivable5,800 I : 5,800 Id. leash: Accounts receivable4,0001 : 4,000 Ie. Cash 3,920

Question

Carla Cain

Business

15 February, 07:14

On February 3, Smart Company sold merchandise in the amount of $5,800 to Truman Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Smart uses the perpetual inventory system and the gross method. Truman pays the invoice on February 8, and takes the appropriate discount. The journal entry that Smart makes on February 8 is:a. Cash 5,684Sales discounts 116Accounts receivable 5,800b. leash : Accounts receivable5,6841 : 5,6841C. I Cash: Accounts receivable5,800 I : 5,800 Id. leash: Accounts receivable4,0001 : 4,000 Ie. Cash 3,920

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Answers (1)

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Patricia Scott · Answer 1

a. Cash 5,684 Sales discounts 116, Accounts receivable 5,800

Explanation:

The journal entry is shown below:

Cash A/c Dr $5,684

Sales Discount A/c Dr $116

To Accounts receivable $5,800

(Being cash received recorded)

The computation of the account receivable

= $5,800

And, the discount would be

= Accounts receivable * percentage given

= $5,800 * 2%

= $116

The remaining amount would be credited to the cash account i. e $5,684 ($5,800 - $116)