On March 12, Klein Company sold merchandise in the amount of $7,800 to Babson Company,...
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On March 12, Klein Company sold merchandise in the amount of $7,800 to Babson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,500. Klein uses the perpetual inventory system and the gross method of accounting for sales. On March 15, Babson returns some of the merchandise. The selling price of the merchandise is $600 and the cost of the merchandise returned is $350. Babson pays the invoice on March 20, and takes the appropriate discount. The journal entry that Klein makes on March 20 is:
A)
| Cash | 7,800 |
|
| Accounts receivable |
| 7,800 |
B)
| Cash | 4,500 |
|
| Accounts receivable |
| 4,500 |
C)
| Cash | 7,056 |
|
| Sales discounts | 144 |
|
| Accounts receivable |
| 7,200 |
D)
| Cash | 7,056 |
|
| Accounts receivable |
| 7,056 |
E)
| Cash | 7,644 |
|
| Sales discounts | 156 |
|
| Accounts receivable |
| 7,800 |
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