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9 March, 11:58

Owens Jewelers uses the perpetual inventory system. On April 2, Owens sold merchandise with a cost of $2,500 for $7,000 to a customer on account with terms of 2/15, n/30. Which of the following journal entries correctly records the sales revenue?

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  1. 9 March, 15:18
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    The following journal entries correctly records the sales revenue:

    1.

    Debit Accounts Receivable $7,000

    Credit Revenue $7,000

    2.

    Debit Cost of good sold $2,500

    Credit Merchandise $2,500

    Explanation:

    The terms of 2/15, n/30 means 2% discount for the payment within 15 days and the full amount to be paid within 30 days.

    When Owens sold merchandise, there are 2 entries record the sales:

    1. Debit Cost of good sold $2,500

    Credit Merchandise $2,500

    2.

    Debit Accounts Receivable $7,000

    Credit Revenue $7,000

    Noted: When received the payment from customer, Owens Jewelers records 2% discount if its customer pays within 15 days by the entry:

    Debit Cash $6860

    Debit Sales Discount $140

    Credit Accounts Receivable $7,000
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