Novak Co. uses the net method to account for cash discounts. On June 1, 2020, it made sales of $52,500 with terms 3/15, n/45. On June 12, 2020, Novak received full payment for the June 1 sale. Prepare the required journal entries for Novak Co. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Question

Alexis Nixon

Business

7 October, 05:21

Novak Co. uses the net method to account for cash discounts. On June 1, 2020, it made sales of $52,500 with terms 3/15, n/45. On June 12, 2020, Novak received full payment for the June 1 sale. Prepare the required journal entries for Novak Co. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

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Carly Petersen · Answer 1

The journal entries are shown below:

On 1 June 2020

Accounts receivable A/c Dr $50,925

To Sales revenue $50,925

(Being goods are sold on credit)

On July 12 2020

Cash A/c Dr $50,925

To Accounts receivable A/c $50,925

(Being cash received is recorded)

The computation is shown below:

= Sales amount - discount

= $52,500 - $1,575

= $50,925

And, The discount = Sales amount * discount rate

= $52,500 * 3%

= $1,575