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10 May, 19:55

Carter Company sells merchandise on account for $4,000 to Hannah Company with credit terms of 2/10, n/30. Hannah Company returns $600 of merchandise that was damaged, along with a check to settle the account within the discount period. What entry does Carter Company make upon receipt of the check?

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  1. 10 May, 20:21
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    Dr. Cash / Bank $3,332

    Dr. Sales returns and Allowances $600

    Dr. Discount Expense $68

    Cr. Account Receivable $4,000

    Explanation:

    Terms of sale 2/10, n/30 means there is a discount of 2% is available on payment of due amount within discount period of 10 days after sale with net credit period of 30 days.

    As per given data

    Sale = $4,000

    Sales return = $600

    Receivable = $4,000 - $600 = $3,400

    As the payment is made within discount period, so discount will be availed on the amount due

    Discount = $3,400 x 2% = $68

    Payment by Customer = $3,400 - $68 = $3,332
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Home » Business » Carter Company sells merchandise on account for $4,000 to Hannah Company with credit terms of 2/10, n/30. Hannah Company returns $600 of merchandise that was damaged, along with a check to settle the account within the discount period.
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