merchandise costing 1200 is sold for 2200 on term 2/30, n/60. If the customer pays within the discount period. Prepare the journal entries needed at (a) time of sale and (b) collection of payment from the customer, assuming the company uses a perpetual inventory system with the gross method of recording sales discounts.

Question

Jeremy Woods

Business

31 March, 15:39

merchandise costing 1200 is sold for 2200 on term 2/30, n/60. If the customer pays within the discount period. Prepare the journal entries needed at (a) time of sale and (b) collection of payment from the customer, assuming the company uses a perpetual inventory system with the gross method of recording sales discounts.

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Katelynn Parrish · Answer 1

The journal entries are as follows:

(a) Accounts receivables [$2,200 - 2%] A/c Dr. $2,156

To Sales revenue $2,156

(To record the sale)

(b) Cost of Goods Sold A/c Dr. $1,200

To inventory $1,200

(To record the cost of goods sold)

(c) Cash A/c Dr. $2,156

To Accounts receivables $2,156

(To record payment within discount term)