Arter company sells merchandise on account for $4,000 to hannah company with credit terms of 2/10, n/30. hannah company returns $600 of merchandise that was damaged, along with a check to settle the account within the discount period. what entry does carter company make upon receipt of the check?

The answers are:

Explanation:

The credit terms of 2/10, n/30 means that if Hannah Company pays within ten days, they will get a 2% discount, or they have thirty days to pay the full receipt.

Hannah's check should be for:

($4,000 - $600) x 0.98% = $3,400 x 0.98% = $3,332  

Arter Company should record the following entries:

Cr Accounts receivable $4,000

Dr $3,332 Cash

Dr $68 Sales discount

Dr $600 returned merchandise (damaged)