PE 6-5A Transactions for buyer and seller

Storall Co. sold merchandise to Bunting Co. on account, $8,000, terms 2/15, n/30. The
cost of the merchandise sold is $3,000. Storall Co. issued a credit memo for $1,000 for
merchandise returned and later received the amount due within the discount period. The
cost of the merchandise returned was $400. Journalize Storall Co.’s and Bunting Co.’s
entries for the payment of the amount due.

Answer:
Storall Co. journal entries:
           Cash ($8,000 – $1,000 – $140).............................................. 6,860
           Sales Discounts [($8,000 – $1,000) × 2%] ........................... 140
                                        Accounts Receivable—Bunting Co. ($8,000 – $1,000) 7,000

Bunting Co. journal entries:
            Accounts Payable—Storall Co. ($8,000 – $1,000) .............. 7,000
                                        Merchandise Inventory [($8,000 – $1,000) × 2%]........... 140
                                        Cash ($8,000 – $1,000 – $140).............................6,860