Upon sale of merchandise (April 16) the company records the sale under the assumption that the customer will take the discount offered and pay within the time frame to redeem the discount (2/10 n/30).

4/16 Accounts Receivable - Miami Health Club 5649.80

Sales 5649.8

4/16 Cost of Goods Sold 3864.00

Inventory 3864.00

Three days later (April 19th) the customer returns $416.50 worth of defective merchandise and a credit memo is issued. How is this journalized?

Alt the end of the period (April 30th, 14 days after sale) the account remains unpaid. They have not exceeded the given time frame to pay in full but have missed the window to maintain the sales discount. Given that the net method was used to record the discount immediately, how is the account adjusted to illustrate the fact that the discount was not taken advantage of? How is this journalized?

The Chart of Accounts includes the following accounts and account numbers:

Cash - 1110 Notes Receivable - 1111 Accounts Receivable - 1112 Interest Receivable - 1113 Inventory - 1114 Est. Returns Inventory - 1115 Office Supplies - 1116 Store Supplies - 1117 Prepaid Insurance - 1118 Land - 1120 Building - 1122 Accum Dep - Building - 1123 Equipment - 1124 Accum Dep - Equipment - 1125 Accounts Payable - 2100 Salaries Payable - 2110 Customer Refunds Payable - 2120 Notes Payable-2150 Marty Chavez, Capital - 3100 Marty Chavez, Drawing - 3110 Income Summary Sales - 4100 Interest Revenue - 6100 COGS - 5100 Sales Salaries Expense - 5200 Store Supplies Expense - 5220 Misc Selling Expense - 5290 Office Salaries Expense - 5300 Dep Expense (Equipment) - 5320 Insurance Expense - 5330 Office Supplies Expense - 5340 Dep Expense (Building) - 5350 Misc Administrative Expense - 5390 Interest Expense - 7100