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A company sells merchandise for $2,000 on account FOB shipping point with terms 2/10 net/30?


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Old 07-13-2008, 06:30 AM
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Default A company sells merchandise for $2,000 on account FOB shipping point with terms 2/10 net/30?

and prepays $100 of transportation costs for the buyer. What entries would be made on my receipt of full payment from the buyer?
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Old 07-13-2008, 06:30 AM
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Default A company sells merchandise for $2,000 on account FOB shipping point with terms 2/10 net/30?

It depends on if the purchaser paid within 10 days or not. If they paid within 10 days, then they get a 2% discount (under the term 2/10). In that case, you would received:

2,000 * .98 = 1,960 plus the transportation costs paid on the buyer's behalf = 1960 + 100 = $2,060.

Cash $2,060 (debit)
Accounts Receivable $2,060 (credit)

If not paid within 10, days, then the discount does not apply and you would receive the $2,000 + 100 = 2,100

Cash $2,100 (debit)
Accounts Receivable $2,100 (credit)

Good luck!
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