E18-7 (Sales with Discounts) On June 3, 2014, Hunt Company sold to Ann Mount mer

Question

E18-7 (Sales with Discounts) On June 3, 2014, Hunt Company sold to Ann Mount merchandise hav ing a sales price of $8,000 (cost $5,600) with terms of 2/10, n/60, f.o.b. shipping point. Hunt estimates that merchandise with a sales value of $800 will be returned. An invoice totaling $120, terms n/30, was received by Mount on June 8 from Olympic Transport Service for the freight cost. Upon receipt of the goods, on June 5, Mount notified Hunt that $300 of merchandise contained flaws. The same day, Hunt issued a credit memo covering the defective merchandise and asked that it be returned at Hunt's expense 2

Explanation / Answer

Payment received on June 12:

Discount= 7700*2%= 154

Cash received= 7546

a. Jouranl entry:

Particulars Amount Sales price 8000 Less: Return -300 Net payment 7700

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