Credit terms

Ail Bane · #1 Feb 15, 2007, 06:26 AM

I just had a quick question about selling merchandise on credit.

If a buyer sold merch on credit for $7,000, terms 2/10, 1/15, n/30; With 700 units at $5 each

I just wanted to know what would be the COGS and Inv. I think it would be in the $3,000's

CaptainForest · Feb 15, 2007, 08:32 AM

700 units x $5 = $3,500, or is it $7,000

Or are you asking what the JE for the seller is? Who bought it at 3,500 and sold it for 7,000?

Ail Bane · Feb 15, 2007, 01:58 PM

The actual problem looks like this:
If a buyer sold merch on credit for $7,000, terms 2/10, 1/15, n/30***

The three asterisks at the end of the problem refer to this.
***700 units at $5 each

So I guess I need to know the seller's/ buyers JE.

Would the JE look like this?

12/24
DR. A/R 7000
CR. SALES 7000

DR. COGS 3500
CR. Inventory 3500

CaptainForest · Feb 15, 2007, 06:36 PM

Yes, your JE is correct for the seller.



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