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Sterling makes a credit sale of $1,000 on September 1, 2016, terms 2/10/30. They accept a...

Sterling makes a credit sale of $1,000 on September 1, 2016, terms 2/10/30. They accept a return of $400 on September 5th.

What amount is due if full payment was received on September 8th. Make the journal entry in good form.

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Answer #1

Terms of Credit sale is if payment is made within 10 days of ale then discount of 2% will be allowed to buyer. In given case, customer made payment within 8 days of sale, therefore he is allowed a discount of $12 [($1000 - $400) * 2%].

Date Account Titles Debit Credit
Sep 1, 2016 Accounts Receivable $1,000
Sales Revenue $1,000
Sep 5, 2016 Sales Return $400
Accounts Receivable $400
Sep 8, 2016 Cash $588
Discount $12
Accounts Receivable $600
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