On March 12, Klein Company sold merchandise in the amount of $7,800 to Babson Company,...
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Accounting
On March 12, Klein Company sold merchandise in the amount of $7,800 to Babson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,500. Klein uses the perpetual inventory system and the gross method of accounting for sales. On March 15, Babson returns some of the merchandise. The selling price of the merchandise is $600 and the cost of the merchandise returned is $350. Babson pays the invoice on March 20, and takes the appropriate discount. The journal entry that Klein makes on March 20 is:
A)
Cash
7,800
Accounts receivable
7,800
B)
Cash
4,500
Accounts receivable
4,500
C)
Cash
7,056
Sales discounts
144
Accounts receivable
7,200
D)
Cash
7,056
Accounts receivable
7,056
E)
Cash
7,644
Sales discounts
156
Accounts receivable
7,800
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