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12 April, 17:24

Fashion Jewelers uses the perpetual inventory system. On April 2, Fashion sold goods with a cost of $5,500 for $14,000 with terms of 4/15, n/30. On April 4, the customer reported damaged goods and Fashion granted a $2,000 sales allowance. On April 10, Fashion received the payment for the sale. Give the journal entry that will be recorded on April 10 by Fashion.

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  1. 12 April, 17:41
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    The journal entry is shown below:

    Cash A/c Dr $11,520

    Sales discount A/c Dr $480

    To Account Receivable $12,000

    (Being the cash received is recorded with discount)

    Since in the cost of goods sold is $14,000 in which the $2,000 reflect returned goods, so the remaining balance is $12,000

    And, the payment is made within 30 days, so the customer can avail 4% of the goods received

    So, the discount would be = $12,000 * 4% = $480
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