On June 3, Hunt Company sold to Ann Mount merchandise having a sales price of $12,000 with terms of 3/10, n/60, f.o.b. shipping point. An invoice totaling $120, terms n/30, was received by Mount on June 8 from the Olympic Transport Service for the freight cost. Upon receipt of the goods, June 5, Mount notified Hunt Company that merchandise costing $400 contained flaws that rendered it worthless. The same day, Hunt Company issued a credit memo covering the worthless merchandise and asked that it be returned at company expense. The freight on the returned merchandise was $29, paid by Hunt Company on June 7. On June 12, the company received a check for the balance due from Mount.
(a) Prepare the journal entry under basis (2), assuming that Ann Mount did not remit payment until August 5. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation Debit Credit
Cash Accounts Receivable