advanced computer parts uses the perpetual inventory system. on may 5, advanced sold merchandise with a cost…
advanced computer parts uses the perpetual inventory system. on may 5, advanced sold merchandise with a cost of $1,000 for $5,500 to a customer on account with terms of 1/10, n/30. which of the following journal entries correctly records the payment received from the customer on may 11 using the gross method?\n\na.\naccounts debit credit\ncash 5,500\naccounts receivable 5,445\nsales discounts 55\n\nb.\naccounts debit credit\ncash 4,500\naccounts receivable 4,500\n\nc.\naccounts debit credit\ncash 5,445\nsales discounts 55\naccounts receivable 5,500\n\nd.\naccounts debit credit\ncash 5,445\naccounts receivable 5,445
Answer
Explanation:
Step1: Determine if the discount applies
The sale occurred on May 5 with terms 1/10, n/30. Payment on May 11 is within the 10-day discount period.
Step2: Calculate the sales discount amount
The discount is 1% of the gross sales price of $$5,500$. $$ \text{Sales Discount} = $5,500 \times 0.01 = $55 $$
Step3: Calculate the cash received
Subtract the discount from the total accounts receivable balance. $$ \text{Cash} = $5,500 - $55 = $5,445 $$
Step4: Identify the journal entry components
Debit Cash for the amount received, debit Sales Discounts for the discount taken, and credit Accounts Receivable for the full original invoice amount.
Answer:
C.
| Accounts | Debit | Credit |
|---|---|---|
| Cash | 5,445 | |
| Sales Discounts | 55 | |
| Accounts Receivable | 5,500 |