A Company Sold Merchandise for $20,000 on Account with Terms

question 88

Multiple Choice

A company sold merchandise for $20,000 on account with terms of 3/10, n/30. The company uses a perpetual inventory system. After two days, it received defective merchandise worth $2,000. The journal entry to record the cash receipt for sale if the payment is received within 10 days of the invoice date would include:

• A)a debit to Cash for $17,460, a credit to Merchandise Inventory for $540, and a credit to Sales Revenue for $18,000.
• B)a debit to Cash for $17,460, a debit to Sales Discount for $540, and a credit to Accounts Receivable for $18,000.
• C)a debit to Cash for $18,000, a debit to Merchandise Inventory for $2,000 and a credit to Accounts Receivable.
• D)a debit to Sales for $20,000, a credit to Accounts Receivable for $20,000, and a credit to Sales Discount for $2,000.

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Definitions:

Price of Y

The market cost or value assigned to a good or service denoted by 'Y', influenced by factors such as supply, demand, and competition.

Money

An officially issued legal tender generally accepted as a medium of exchange, a unit of account, and a store of value.

Price of X

Denotes the amount of money required to purchase a specific good or service dubbed "X".

Price of Y

The amount of money required to purchase a specific quantity of product Y or service Y.