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7 July, 05:45

On September 12, Ryan Company sold merchandise in the amount of $9,400 to Johnson Company, with credit terms of 2/10, n/30. The cost of the items sold is $5,800. Ryan uses the periodic inventory system and the net method of accounting for sales. On September 14, Johnson returns some of the merchandise. The selling price of the merchandise is $860 and the cost of the merchandise returned is $530. Johnson pays the invoice on September 18, and takes the appropriate discount. The journal entry that Ryan makes on September 18 is:

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  1. 7 July, 06:11
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    Account Debit Credit

    Cash ($8540-$170.8=$8369.2) $8369.2

    Sales Discount ($8540 * (2%*$8540)) $170.8

    Account Receivable ($9400 - $860) $8540

    Step-by-step explanation:

    The journal entries made earlier are:

    Account Debit Credit

    On Sep 12:

    Account Receivable $9400

    Sales revenue $9400

    On Sep 14:

    Sales Returns $860

    Account Receivable $860

    On Sep 18:

    Now we will calculate the Account Receivable:

    Account Receivable = $9400 - $860

    Account Receivable = $8540

    Now we will calculate the Sales Discount:

    (Discount is 2%)

    Sales Discount = $8540 * (0.02)

    Sales Discount = $170.8

    Now we will Calculate the Cash:

    Cash = Account Receivable - Sales Discount

    Cash=$8540-$170.8

    Cash=$8369.2

    The journal Entry on Sep 18 is:

    Account Debit Credit

    Cash ($8540-$170.8=$8369.2) $8369.2

    Sales Discount ($8540 * (2%*$8540)) $170.8

    Account Receivable ($9400 - $860) $8540
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