Sundance Co. sold merchandise to Butterfield Co. on account, $16,800, terms 2/15, n/30. The cost of the merchandise sold is $12,600. Sundance Co. issued a credit memo for $3,800 for merchandise returned and later received the amount due within the discount period. The cost of the merchandise returned was $2,850. Journalize Sundance Co.’s and Butterfield Co.’s entries for the payment of the amount due.
Answer:
Sundance Co. journal entries:
Cash ($16,800 – $3,800 – $260) 12,740
Sales Discounts [($16,800 – $3,800) × 2%] 260
Accounts Receivable—Butterfield Co. ($16,800 – $3,800) 13,000
Butterfield Co. journal entries:
Accounts Payable—Sundance Co. ($16,800 – $3,800) 13,000
Merchandise Inventory [($16,800 – $3,800) × 2%] 260
Cash ($16,800 – $3,800 – $260) 12,740
