A Company Sells Merchandise for $1,000 on Account with Terms

question 6

Multiple Choice

A company sells merchandise for $1,000 on account with terms of 2/10,n/30.Defective merchandise of $200 is returned 2 days later.Which of the following entries would be made to record the cash receipt for the sale if the payment is received 20 days later?

• A) The accounting entry would be an $800 debit to Cash and an $800 credit to Accounts receivable.
• B) The accounting entry would be a $784 debit to Cash, a $16 debit to Sales discounts and an $800 credit to Accounts receivable.
• C) The accounting entry would be a $16 debit to Sales discounts, an $800 debit to Cash and an $816 credit to Accounts receivable.
• D) The accounting entry would be an $800 debit to Cash, a $16 credit to Sales discounts and a $784 credit to Accounts receivable.