Question 669275: Presented below are selected transactions of Menge Company. Menge sells in large quantities to other companies and also sells its product in a small retail outlet.
March 1 Sold merchandise on account to Lynda Company for $5,000, terms 4/10,/30.
March 3 Lynda Company returned merchandise worth $400 to Menge.
March 9 Menge collected the amount due from Lynda Company from the March 1 sale.
March 15 Menge sold merchandise for $200 in its retail outlet. The customer used his Menge credit card.
March 31 Menge added 1% monthly interest to the customer’s credit card balance.
Prepare journal entries for the transactions above.
I Just need journal entry for March 9 and 31. And can you please show how you got the answer. Thank you so much.....
Answer by MathTherapy(10551)   (Show Source):
You can put this solution on YOUR website!
This is a math help website, not an accounting help website.
Anyway, for March 9, Lynda Co. will get a 4% discount, since Lynda Co paid within the discount period (10 days). Therefore,
Dr._____Cash: 4,800
Dr._____Sales Returns, Discounts and Allowances (or whichever account sales discounts are debited to): 200
Cr._____Lynda Co.: 5,000
Since it only had one credit card customer who/that owes $200 (March 15 credit sale), monthly interest will be $2 (1% of $200). The March 31 journal entry will be:
Dr._______Accounts Receivable - Customer’s Credit Card Account: $2
Cr.______Interest Income: $2
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