BUISENESS MANAGEMENT
MERCHANDISING
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Question
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On February 3, Smart Company sold merchandise in the amount of $4, 300 to Truman Company, with credit terms of 3/10, n/30. The cost of the items sold is $2, 970. Smart uses the perpetual inventory system and the gross method. Truman pays the invoice on February 8, and takes the appropriate discount. The journal entry that Smart makes on February 8 is:
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Cash 2, 970Accounts receivable 2, 970
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Cash 4, 300Accounts receivable 4, 300
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Cash 4, 220Sales discounts 89Credit Accounts receivable 4, 309
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Cash 2, 890Accounts receivable 2, 890
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Cash 4, 171Sales discounts 129Credit Accounts receivable 4, 300
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Explanation:
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