Smith Company sold merchandise in the amount of $5,800 to Batter Company on September 1, with...

Smith Company sold merchandise in the amount of $5,800 to Batter Company on September 1, with credit terms of 2/10, n/30. The cost of the merchandise is $2,400. On September 4, Batter Company returns some of the merchandise, which were put back into Smith's inventory. The selling price and the cost of the returned merchandise are $800 and $500, respectively. (Assume both companies use the perpetual inventory method.) Batter Company's journal entry on September 8, when they pay the amount due, will include:

A) Credit Cash $5,194

B) Credit Sales Discounts $100

C) Debit Accounts Payable $5,000

D) Credit Purchase Discounts $100

Solutions

Expert Solution

The answer will be option "C" i.e. debit accounts payable $5,000

Explanation: Here amount due = purchase - returns

= 5800 - 800 = $5,000

Discount = 2% of $5,000 = $100

Net amount payable = 5,000 - 100 = 4,900

The journal entry for this will be:

	Dr	Cr
Accounts payable	5,000
Cash		4,900
Inventory		100

ekkarill92 answered 1 year ago

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