On September 12, Vander Company sold merchandise in the amount of $3,950 to Jepson Company, with credit terms of 2/10, n/30. The cost of the items sold is $2,725. Vander uses the periodic inventory system and the gross method of accounting for sales. On September 14, Jepson returns some of the merchandise. The selling price of the merchandise is $340 and the cost of the merchandise returned is $240. Jepson pays the invoice on September 18, and takes the appropriate discount. The journal entry that Vander makes on September 18 is:

Date                        Account                                        Debit                  Credit

September 18        Cash                                            $3,537.80

                                Sales discount                           $      72.20

                                Accounts Receivable                                            $3,610

Explanation:

Net merchandise sold = 3,950 - 340

= $3,610

Sales discount is 2% if paid in 10 days which Jepson did.

= 2% * 3,610

= $72.20

Cash = Net sales - discount

= 3,610 - 72.20

= $3,537.80

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