Tamarisk, Inc. sells merchandise on account for $2600 to Morton Company with credit terms of 2/7, n/30. Morton Company returns $1100 of merchandise that was damaged, along with a check to settle the account within the discount period. What entry does Tamarisk, Inc. make upon receipt of the check?

cash 1,470

sales discount 30

return goods 1,100

sales revenue 2,600

to record payment received from Morton Company

Explanation:

on sale:

account receivable 2,600

sales revenue 2,600

we analize the commercial terms:

2/7 within the first 7 days, paying the invoice generates a 2% discounts

n/30 after that, until 30 days pays the nominal amount

balance at payment date:

sales for 2,600

returned goods: (1,100)

balance 1,500

discount 1,500 x 2% = 30

journal entry:

cash 1,470 (1,500 nominal - 30 discount)

sales discount 30

return goods 1,100

sales revenue 2,600