Nash's trading post, llc sells merchandise on account for $1200 to morton company with credit terms of 2/7, n/30. morton company returns $500 of merchandise that was damaged, along with a check to settle the account within the discount period. what entry does nash's trading post, llc make upon receipt of the check?

The answer is: Nash's Trading Post should record the following entries

Explanation:

The credit terms of 2/7, n/30 means that if Morton Company pays within seven days, they will get a 2% discount, or they have thirty days to pay the full receipt.

Morton's check should be for

($1,200 - $500) x 0.98% = $700 x 0.98% = $686  

Nash's Trading Post should record the following entries

Cr Accounts receivable $1,200

Dr $686 Cash

Dr $14 Sales discount

Dr $500 returned merchandise (damaged)

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