Question

feb 10 sold merchandise inventory on account for $4,600 to nitya meditation place. payment terms were 1/15, n/30. these goods cost the company $2,300. begin by preparing the entry to journalize the sale portion of the transaction. do not record the expense related to the sale. we will do that in the following step. now journalize the expense related to the february 10 sale - cost of goods, $2,300. feb 12 paid amount owed on credit purchase of february 3, less the return and the discount.

Explanation:

Step1: Journalize the sale

When selling on - account, accounts receivable is debited and sales revenue is credited.
Debit: Accounts Receivable - Nitya Meditation Place $4,600
Credit: Sales Revenue $4,600

Step2: Journalize the cost of goods sold

The cost of goods sold is debited and the merchandise inventory is credited.
Debit: Cost of Goods Sold $2,300
Credit: Merchandise Inventory $2,300

Step3: Since no information about the February 3 credit - purchase, return and discount is given for the Feb 12 entry, we assume a general case of paying a payable with a discount. If we assume the payable amount before return and discount was $X$, and the discount rate is $d$ and return amount is $R$. The payable amount after return is $X - R$. The amount paid is $(X - R)(1 - d)$. The discount amount is $(X - R)d$.

Debit: Accounts Payable (original amount less return) $(X - R)$
Credit: Cash $(X - R)(1 - d)$
Credit: Purchase Discounts $(X - R)d$

Answer:

Date	Accounts	Debit	Credit
	Sales Revenue		$4,600$
Feb 10	Cost of Goods Sold	$2,300$
	Merchandise Inventory		$2,300$
Feb 12	Accounts Payable (original amount less return)	$(X - R)$
	Cash		$(X - R)(1 - d)$
	Purchase Discounts		$(X - R)d$