1. On January 10, sold merchandise on account to Rayms $8800 and Fischer $7500. Terms 2/10,...

1. On January 10, sold merchandise on account to Rayms $8800 and Fischer $7500. Terms 2/10, n/30.

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Expert Solution

There is two situations arises in that case, (i) where payment is made within 10 days then 2% trade discount will be available, or (ii) Otherwise 100% payment should be due within 30 days.

(i) Journal Entries in first case will be done on net payment basis {($8,800 + $7,500) x 0.98} as follow:

Sr. No.	Particular	Debit	Credit
(i)	Trade Receivables	15974
	To Income from Operations (Sales)		15974
	(Being Revenue from operation recorded)

(ii)	Cash and Cash Equivalent	15974
	To Trade Receivables		15974
	(Being Payment received within 10 days)

(ii) Journal Entry if payment is not made within 10 days:

Sr. No.	Particular	Debit	Credit
(i)	Trade Receivables	16300
	To Income from Operations (Sales)		16300
	(Being Revenue from operation recorded)

(ii)	Cash and Cash Equivalent	16300
	To Trade Receivables		16300
	(Being Payment received within 10 days)

ekkarill92 answered 1 year ago

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