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

question 25

Multiple Choice

A company sold merchandise for $1,000 on account with terms of 2/10, n/30. The company uses a perpetual inventory system. Defective merchandise of $200 was returned 2 days later. If the payment was received after 20 days, the journal entry to record the cash receipt will include:

• A)a debit to Cash for $980 and a credit to Accounts Receivable for $980.
• B)a debit to Cash for $800 and a credit to Accounts Receivable for $800.
• C)a credit to Sales for $800 and a debit to Cash for $ 800.
• D)a credit to Cost of Goods Sold for $1000 and a debit to Sales for $1,000.

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Definitions:

Consumer Journey

The complete set of experiences that customers go through when interacting with a company and brand, from discovery to purchase and beyond.

Trade Promotions

Marketing activities executed to increase demand among merchant partners, such as retailers or wholesalers, often through discounts or product display enhancements.

Personal Selling

A sales approach involving direct, face-to-face interaction between salespeople and prospective customers to persuade them to make a purchase.

Publicity

The act of gaining public attention or visibility for a person, product, or organization, often through the media.