Question

6 Journalize the following merchandise transactions: (15 percent) Sold merchandise on account, $200,000 with terms of 2/10, n/30. The cost of the merchandise sold was $160,000. Received payment less the discount.

Answer 1

Jounral Entries
Account Titles and Explanation	Debit ($)	Credit ($)
Accounts Receivable                                                            Dr	200,000.00
To Sales		200,000.00
(Goods sold on account basis. Term of sales being 2/10, n/30)
Cost of goods sold                                                               Dr	160,000.00
To Inventory		160,000.00
( Cost of merchandise sold reduced from inventory )
Cash                                                                                             Dr	196,000.00
Discount on sales                                                                    Dr	4,000.00	(200000*2%)
To Accounts Receivable		200,000.00
(Cash received from accounts receivable ,net of discount)

Explanation:

1	We have to understand the term 2/10,n/30, it means that if payment is made in 10 days from the date of sale than 2 % discount shall be given . Otherwise payment is to be made within 30 days
2	First, we have book sales on full amount , than if payment is made within the prescribed period than discount is debited at the time of receipt of amount. (as done in 3rd entry)
3	Inventory should be reduced at the time of sale. Hence, 2nd entry is passed