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6 September, 13:08

On May 1, 2020, Mount Company enters into a contract to transfer a product to Eric Company on September 30, 2020. It is agreed that Eric will pay the full price of $25,000 in advance on June 15, 2020. Eric pays on June 15, 2020, and Mount delivers the product on September 30, 2020. Prepare the journal entries required for Mount in 2020

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  1. 6 September, 13:11
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    Dr. Accounts Receivable ... 25,000

    Cr. Sales ... 25,000

    Narration. Being sale of inventory to Eric for $25,000

    Dr Cash ... 25,000

    Cr. Accounts Receivable ... 25,000

    Being receipt of Cash for Sales to Eric for $25000

    Explanation:

    On May 1, 2020, Mount Company enters into a contract to transfer a product to Eric Company on September 30, 2020.

    It is agreed that Eric will pay the full price of $25,000 in advance on June 15, 2020.

    Dr. Accounts Receivable ... 25,000

    Cr. Sales ... 25,000

    Narration. Being sale of inventory to Eric for $25,000

    When Eric pays on June 15, 2020, and Mount delivers the product on September 30, 2020.

    Journal Entry

    Dr Cash ... 25,000

    Cr. Accounts Receivable ... 25,000

    Being receipt of Cash for Sales to Eric for $25000
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