On September 12, Vander Company, Inc. sold merchandise in the amount of $5,800 t

Question

On September 12, Vander Company, Inc. sold merchandise in the amount of $5,800 to Jepson Company on credit with terms of 2/10, n/30. The cost of the items sold is $4,000. Vander uses the gross method of accounting for sales and a periodic inventory system. On September 14, Jepson returns some of the merchandise. The selling price of the merchandise is $500 and the cost of the merchandise returned is $350. Jepson pays the invoice on September 18 and takes the appropriate discount. The journal entry that Vander makes on September 18 is:

Cash 5,684 Sales discounts 116 Accounts receivable 5,800

Explanation / Answer

Accounts receivable A/C

To sales

(being sales made to jepson company by vander co. on credit)

To accounts receivable

(being returns of merchendise by vander co. worth $500)

To accounts receivable A/C

(being amount realised from vandar co. within 10 days of sale date plus 2 percent sale discount is given)

Date Particulars ($)Debit Credit($) 9/12

Accounts receivable A/C

5800 -

To sales

(being sales made to jepson company by vander co. on credit)

- 5800 9/14 Sales A/C 500 -

To accounts receivable

(being returns of merchendise by vander co. worth $500)

- 500 9/18 Cash A/C 5194 - Sales discount A/C 106 -

To accounts receivable A/C

(being amount realised from vandar co. within 10 days of sale date plus 2 percent sale discount is given)

- 5300

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