On February 3, Smart Company sold merchandise in the amount of $5,800 to Truman Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Smart uses the perpetual inventory system and the gross method. Truman pays the invoice on February 8, and takes the appropriate discount. The journal entry that Smart makes on February 8 is:
A.
| Cash | 5,684 | |
| Accounts receivable | 5,684 |
B.
| Cash | 4,000 | |
| Accounts receivable | 4,000 |
C.
| Cash | 5,800 | |
| Accounts receivable | 5,800 |
D.
| Cash | 3,920 | |
| Sales discounts | 80 | |
| Accounts receivable | 4,000 |
E.
| Cash | 5,684 | |
| Sales discounts | 116 | |
| Accounts receivable | 5,800 |
Answer: E
Business
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