Based on the information below, journalize the entries during April 20XX for the Johnson Company and the Hills Company. Both use a perpetual inventory system.
April 4 - Johnson Company sells Hills Company on account merchandise costing $200 for $450, terms 2/10, net 30.
April 10 - Hills Company returns as defective $150 worth of the $450 merchandise received. The Johnson Company's cost is $85.
April 14 - Hills Company pays within the discount period.
What Is A Trade Discount:
It is common practice for companies that sells goods and services on credit to offer a Trade Discount. A Trade Discount is a rebate that is offered (i.e. as a percentage of the selling price) if payment is made by the customer in a given time period.
Answer and Explanation: 1
|Cost of goods sold||200|
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fromChapter 4 / Lesson 21
Understand what trade discounts are through their definition and their uses. Learn how to compute trade discounts with step-by-step calculations in given examples.