I\'m working on the following problem: Sampson Co. sold merchandise to Batson Co
ID: 2584102 • Letter: I
Question
I'm working on the following problem: Sampson Co. sold merchandise to Batson Co. on account, $46,000, terms 2/15, net 45. The cost of the merchandise sold is $38,500. Sampson Co. issued a credit memo for $1,500 for merchandise returned that originally cost $950. The Batson Co. paid the invoice within the discount period. I need help in the Seller journal entries. Currently I have:
A/R Batson Co. $46,000
Sales $46,000
Cost of goods sold $38,500
Merchandise Inventory $38,500
Sales $1,500
A/R Batson Co. $1,500
Merchandise Inventory $950
Cost of goods sold $950
Cash $44,500
A/R Batson Co. $44,500
My questions are:
1.) For the merchandise inventory returned originally cost do I put it as The $950 above or do I put the discounted price calculated from the buyer side as $890?
2.) For the final entry am I putting the $44,500 that was the original total or do I put the Cash amount only of $43,610? ($44,500 - $890 [2/15] = $43,610)
Explanation / Answer
Sampson Co. General Journal Journal Amount (DR) Amount (CR) Accounts Receivable $ 46,000.00 To Sales $ 46,000.00 (Being Sales to Batson Co.) Cost of goods sold $ 38,500.00 To Mercendise Inventory $ 38,500.00 (Being amount of cost of goods sold to Batson Co.) Sales Return & Allowances $ 1,500.00 To Accounts Receivable $ 1,500.00 (Being amout of Credit memo issued to Batson Co.) Mercendise Inventory $ 950.00 To Cost of goods sold $ 950.00 (Being amount of cost of Sales return) Cash=($46000-$1500)*98%) $ 43,610.00 Sales Discount=($46000-$1500)*2% $ 890.00 To Accounts Receivable $ 46,000.00 (Being Amount received from Batson Co. after allowing 2% discount) Terms 2/15 means if payment within 15 days discount allowed 2%