Almukahal Inc. sold $5000 in merchandise on May 7 with terms 2/10, n30 to Harris

Question

Almukahal Inc. sold $5000 in merchandise on May 7 with terms 2/10, n30 to Harris. On May 10, $500 of merchandise was returned by Harris, and he paid the remaining amount on May 15. Almukahal would record the receipt of payment on May15 as:

A. Debit cash $4410, sales discount $90, and sales returns $500; Credit accounts receivable $5000

B. Debit cash $4500; Credit accounts receivable $4410 and sales discount $90

C. Debit cash $4410 and sales discount $90, Credit accounts receivable $4500

D. Debit cash $5000, Credit accounts receivable $5000

E. Debit cash $4400 and sales discount $100, Credit accounts receivable $4500

Explanation / Answer

c) Debit cash 4410 and sales discount 90 , credit accounts receivable 4500

sales discount = (5000 - 500) * 0.02 = 90

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