Merchandise is sold on account to a customer for $24,000, terms FOB shipping point, 2/10, n/30

Merchandise is sold on account to a customer for $24,000, terms FOB shipping point, 2/10, n/30. The seller paid the freight of $425. Determine the following: (a) amount of the sale, (b) amount debited to Accounts Receivable, (c) amount of the discount for early payment, and (d) amount due within the discount period.


Answer:
a. $24,000
b. $24,425
c. $480 ($24,000 × 2%)
d. $23,945 ($24,425 – $480)




After the amount due on a sale of $28,000, terms 2/10, n/eom, is received from a customer within the discount period, the seller consents to the return of the entire shipment. The cost of the merchandise returned was $16,800. (a) What is the amount of the refund owed to the customer? (b) Journalize the entries made by the seller to record the return and the refund.


Answer:

a. $27,440 [$28,000 – ($28,000 × 2%)]
b.
 Sales Returns and Allowances 28,000
Sales Discounts 560
Cash 27,440
b.
 Merchandise Inventory 16,800
Cost of Merchandise Sold 16,800