 point that out over here. A is the one that gave the return. So I'm going to put our cursor in V8 equals and point to that 300 as well again, bringing that balance down, meaning that A now only owes us 1005. The total being 1005 equaling the total on the trial balance of 1005. Okay, let's see what happens on the next transaction, which is 724. We paid L the balance due after discount. So once again, we paid L within the discount period apparently. And if we scroll over here, L we owe the 2000. So if we look back over at what the discount was, we're going to say, when did we buy something from L down here? We bought it for 25, but be careful because remember that there was return, I believe a 500. So we only owe L the 2000 now. If we go back over here one more time, the discount was 210, 215. So we got a 2% discount on that. So we can calculate that a couple of ways. Well, let's think about this first. We're going to say, is cash affected? Of course it is because we're going to pay cash. We're paying off the bill that we owe. Cash has a debit balance. We're going to make it go down by doing the opposite thing to it, which in this case would be a credit. So I'm going to copy that. I'm going to put it on the bottom in row 19, right click, paste it 123. And then what's the amount that we will pay? Okay, so we owe in this case the 2000, so we say 2000 times, we could times the discount times 0.02. That means we're going to get a discount of $40 minus the 2000, one way to calculate it. Again, we could do a quicker calculation possibly by saying 2000 times if we're going to get a 2% discount, 100 minus 2% is 98%. So we can say that's how much we're going to pay. That's the way I'm going to calculate it here. I'm going to say it's a negative to make it a credit. 2000 is what we owe times 0.98. All right. And then we're going to have to debit something. And what are we going to debit? Well, we're paying off the payable. So here's the payable, we're paying it off. It has a credit balance. We're going to debit it to make it go down because we no longer owe that money. I'm going to copy that. I'm going to paste it 123. We are not going to debit the 1,960. Why? Because if we did so, we would still be showing that we owe $40. And we do not. So we need to take the entire 2000 off the books. So I'm going to debit the entire 2000. And then the difference is going to be that $40. And you would think maybe it would go into some discount type of account because we got a discount. But if we were selling something, it would go in the sales discount because we were giving the discount on the sale. But in this case, we're getting a discount on the inventory. So the inventory we bought, we put on the books for 2000. And it's only costing us 1,960. Therefore, we need to bring down the value of the inventory we put on the books by the $40. So inventory has a credit balance. We need to bring it down by the 40. So there we have it. We can calculate the 40 a couple of different ways. We can say, well, it's 2000 times .02, 2%. Or we can say, well, it's the 2000 minus the 1,960. And that's how I'm going to calculate here with our plug formula being negative sum of these four boxes. So I want you to sum that up, which would be a positive 40, then flip the sign. I want a negative 40. Why? Because that's what I need in order for the debits minus the credits to equal zero. So then if we post that out, then I'm going to double click on N8, go to the end of it and plus point to the 2000 and enter. Then I'm going to go to N5, double click, go to the end of it and plus point to the 1,960 and enter. Then go to the merchandise inventory in N7, double click on it, go to the end and plus point to the 40 and enter. All right. Let's look at the next transaction, which will be on a 730, which says that we received the balance due from a company for the one thing I should post. We have this red number here. So we should post the fact that this was paid off. So I'm going to go into the debit section and say equals and point to that 2000 and enter. So now we have a zero here that we owe zero up here matches. That's why it's green. All right. Now we go down here, receive balance due from a company invoice on 719. Okay. So the invoice on 719 was 215 and I'm assuming that's N60 that was paid off now and it looks like we paid it off actually after the discount period. No, we're actually still within the discount period because it's 15, 15 days. So we're going to get a 2% discount on this one. So let's see. So we received money. So we're going to give a 2% discount on this. All right. So is cash affected? Yes, it is. It's affected because we're going to receive cash and therefore cash has a debit balance. We're going to make it go up by doing the same thing to it, which in this case would be another debit. So I'm going to copy that. I'm going to scroll down. I'm going to make this a little bit smaller again and I'm going to put my cursor in H22 and right click and paste it 123. Okay. So how much are we going to get? This is coming from, so it's going to be this one over here. A owes us money. Now the original amount was 1,008, but remember there was that return of the 300. So now they only owe us 1,005. So we're going to take this 1,5 times 0.02 and that would be the discount amount and we can subtract minus the 1,5. There we have the amount we will receive. We could do that also by just saying 1,5 times 0.98 being the 100 minus 2% discount given us the amount we're going to receive of 1470. So I'm going to do that here. I'm going to say this equals the 1,5 times 0.98. So that's how much we're going to get. Then we're going to take this off the books, meaning this person no longer owes us the 1,5. That's an accounts receivable. Accounts receivable has a debit balance. We need to make it go down by doing the opposite thing to it. So I'm going to credit that. So I'm going to credit, I'm not going to credit by the 1,475. We have to credit the full amount that is owed or else we would be showing that they still owe us the $30, which is not correct. So we're going to credit the 1,570. Now the debits do not equal the credits because we are going to give a discount. And this is where we have the sales discount, the sales discount being what we give to our clients, not what is given to us. So this is the sales discount. We're going to paste that in H24. We can calculate it a couple different ways. 1,500 times .02 one way. Or of course we can take the 1500 minus the 1,470. That would be the 30. Now of course I put the 70. This should be 1500. All right, I'm going to do it with the negative sum. And it's actually going to be a debit negative sum of these numbers. So we're going to have cash. Then we're going to reduce the sales by the discount, reduce the net income by the discount. Now you might be saying, why don't we reduce sales? Because really we charged the 1,005. And we should only be charging the 1,070 because we're not going to receive 1,005. But we don't usually make sales go down. We put it in another account called sales discount. And note also that I put the sales discount on the bottom even though it's a debit just because when I'm thinking through the journal entry, that makes it easier for me. It's not completely proper in terms of having the two debits on top. And so just be careful in terms of that type of formatting when you go from different program to different program. Personally, if it helps you to think through the journal entry and go back and see what you did, that's the way I would format it. So then I'm going to double click on the cash at the top, go to the end of it and plus point to the 1,470 and enter. Then I'm going to double click on the receivable, go to the end of it plus the 1,5 that'll make the receivable go down. And then something's in the discount. I'm going to double click on the discount, say plus point to the discount that will make put us back in balance, make net income go down. Remember, net income is revenue, less the expenses. So with that is income of 1,108, not a loss. All right, one more transaction, I believe, which says on 7th sold merchandise, 2C company terms, 210 and 60. All right, so we have one more sale to post here. Oh, also want to post, I got this yellow orange number or red number over here, because we know that A doesn't owe us anything anymore. So I'm going to go in the debit side and say that I'm sorry, I'm going to go in the credit side and say that A paid us this 1,5 should mean that they owe us zero now. And we are back in balance, meaning this ties out to what's on our trial balance. All right, now we can go back over here. We're going to go to this on 730. And we're saying that sold merchandise 2C company 210 and 60. So we sold it on account. Basically, again, we're going to assume before the discount, we're going to assume that they're not going to take the discount. And we'll worry about catching it in the discount later, which we won't have to worry about because we're this is the end of the problem. So we're going to say that is cash affected? No, we bought it on it. We sold it on account. Therefore, what is affected? Accountable, we have an IOU. The accountable has a debit balance, we need to make it go up by doing the same thing, which is another debit. So I'm going to right click down here and paste 123 and record the transaction being for the sales price 74. I'm going to credit something for that same 74. Remember, we're going to have two journal entries related to the sales price, two journal entries related to the cost. The other side related to the sales price is revenue, income, or in this case, sales. So same thing. It's just going to be called sales because we sell merchandise. It has a credit balance. It only goes up. We're going to make it go up by doing the same thing to it, which in this case is another credit. So I'm going to copy that. I'm going to scroll down, paste it 123. All right, let's post this out. I'm going to go to the receivable, double click on it, go to the end of it, plus I know I got to scroll down a bit and point down to that 74 and enter. Then we're going to go to sales over here in N10, double click, go to the end of it, plus point to the 74 credit. That'll put us back in balance, make net income go up. And who paid, who did we have this? This is C company. So we're going to go back to C company and we're going to save it C company. Now owes us this 74 and enter. That will make the green, this green, meaning that the 74 equals the 74 on the trial balance. All right. And then we have the second side of it, which will be that we know that merchandise went down because that's what we gave up in order to get the money. So merchandise has a debit balance. We need to make it go down by doing the opposite thing to it, which in this case would be a credit. I'm going to copy that. I'm going to skip a line, make it a new journal entry, even though again, these things happen at the same time. So to be completely proper, we should have the same journal entry and two debits on top, two credits, but note that it's a lot easier to think about it this way. So we're going to skip a line. I'm going to skip another line to put it on the bottom and then right click and paste it 123. And then that's going to be the cost. I'm going to make it a negative for credit 5, 3, 0, 0. We're going to debit something related to it. That's something being the cost of the merchandise, being the expense of the merchandise that we sold in order to help us generate revenue, the matching principle that's called cost to goods sold. It's an expense, like all expenses has a debit balance generally only goes up. We're going to make it go up by doing the same thing to it, which in this case is a debit. I'm going to double click on N13, go to the end of it and plus 0.253. That will make this balance and a point of net income down. So note, remember, it brings net income down with the effect on income from this transaction, credit minus the debit sales less the cost to goods sold is the 2001 is the net effect. Going to double click on the merchandise inventory, go to the end of it and plus then record the 5, 3 and enter. We got green zeros. We're back in balance green zeros here. We got green green all the way across. We can see the new effect on our balance sheet. We're still in balance here. Assets equal liabilities plus owners equity. Here's our net income, which flows over to our statement of owners equity. Here's our ending equity, which is also in our balance sheet over here. And we can see that that amount is the sum of the beginning equity plus sales less the expenses being the 33208.