Question

On September 12, Ryan Company sold merchandise in the amount of $5,800 to Johnson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Ryan uses the periodic inventory system and the net method of accounting for sales. The journal entry or entries that Ryan will make on September 12 is (are):

Answer 1

Answer:

                                   Debit     Credit

Accounts Receivable  5,684

Sales                                         5,684

Explanation:

The credit terms 2/10, n/30 means that there is a 2% discount if the customer pays in ten days or less and if not, will have to pay the price given. The net method implies registration of all the sales as if the customer would pay in the discount period.

Sales: $5,800 x (1 - 0.02) = $5,684

For the cost of goods sold the company uses the periodic inventor system so there is no registration to make in this sale.