feb 10 sold merchandise inventory on account for $4,600 to nitya meditation place. payment terms were 1/15…
feb 10 sold merchandise inventory on account for $4,600 to nitya meditation place. payment terms were 1/15, n/30. these goods cost the company $2,300. begin by preparing the entry to journalize the sale portion of the transaction. do not record the expense related to the sale. we will do that in the following step. now journalize the expense related to the february 10 sale - cost of goods, $2,300. feb 12 paid amount owed on credit purchase of february 3, less the return and the discount.
Answer
Explanation:
Step1: Journalize the sale
When selling on - account, accounts receivable is debited and sales revenue is credited. Debit: Accounts Receivable - Nitya Meditation Place $4,600 Credit: Sales Revenue $4,600
Step2: Journalize the cost of goods sold
The cost of goods sold is debited and the merchandise inventory is credited. Debit: Cost of Goods Sold $2,300 Credit: Merchandise Inventory $2,300
Step3: Since no information about the February 3 credit - purchase, return and discount is given for the Feb 12 entry, we assume a general case of paying a payable with a discount. If we assume the payable amount before return and discount was $X$, and the discount rate is $d$ and return amount is $R$. The payable amount after return is $X - R$. The amount paid is $(X - R)(1 - d)$. The discount amount is $(X - R)d$.
Debit: Accounts Payable (original amount less return) $(X - R)$ Credit: Cash $(X - R)(1 - d)$ Credit: Purchase Discounts $(X - R)d$
Answer:
| Date | Accounts | Debit | Credit |
|---|---|---|---|
| Feb 10 | Accounts Receivable - Nitya Meditation Place | $4,600$ | |
| Sales Revenue | $4,600$ | ||
| Feb 10 | Cost of Goods Sold | $2,300$ | |
| Merchandise Inventory | $2,300$ | ||
| Feb 12 | Accounts Payable (original amount less return) | $(X - R)$ | |
| Cash | $(X - R)(1 - d)$ | ||
| Purchase Discounts | $(X - R)d$ |