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1) Sunland's Market recorded the following events involving a recent purchase of inventory: Received goods for $121000, terms 2/15, n/30
1) Sunland's Market recorded the following events involving a recent purchase of inventory:
Received goods for $121000, terms 2/15, n/30.
Returned $2900 of the shipment for credit.
Paid $700 freight on the shipment.
Paid the invoice within the discount period.
As a result of these events, the company's inventory
A. increased by $115738.
B. increased by $116424.
C. increased by $118800.
D. increased by $116438.
2) The collection of a $2300 account within the 2 percent discount period will result in a
A. credit to Accounts Receivable for $2254.
B. debit to Sales Discounts for $46.
C. debit to Accounts Receivable for $2254.
D. credit to Cash for $2254.
3) Skysong, Inc. sells merchandise on account for $6400 to Sheridan Company with credit terms of 2/8, n/30. Sheridan Company returns $1400 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check?
A. $4900
B. $6272
C. $6300
D. $5000
Expert Solution
2) Record the receipt of Payment within the Discount Period on sale is
Debit : Cash $ 2244
Debit : Discount $46
Credit : Account Receivables $2,300
So, the correct option is B "Sales Discount for $46".
Workings:
Discount amount = Sale Amount * Discount Rate = $2,300*2%= $46
3) Computation of Amount of Check:
Net Sales = $6,400 - $1,400 = $5,000
Discount @2% = $5,000 * 2% = $100
Amount of Check = $5,000-$100 = $4,900
So, the correct option is A "$4,900".
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