Question

On June 3, Marigold Company sold to Chester Company merchandise having a sale price of $2,200 with terms of 4/10, n/60, f.o.b. shipping point. An invoice totaling $97, terms n/30, was received by Chester on June 8 from John Booth Transport Service for the freight cost. On June 12, the company received a check for the balance due from Chester Company.

Prepare journal entries on the Sage Company books to record all the events noted above under each of the following bases.

a. Sales and receivables are entered at gross selling price.
b. Sales and receivables are entered at net of cash discounts.

Answer 1

A.

Jun 3

Dr Account receivable 2,200

Cr Sales 2,200

Jun 12

Dr Cash 2,112

Dr Sales discount 88

Cr Account receivable 2,200

B.

Jun 3

Dr Account receivable 2,112

Cr Sales discount 2,112

Jun 12

Dr Cash 2,112

Cr Account receivable 2,112

Step-by-step explanation:

Marigold Company Journal entries

A.

Jun 3

Dr Account receivable 2,200

Cr Sales 2,200

Jun 12

Dr Cash 2,112

(2,200-88)

Dr Sales discount 88

(2,200*4%)

Cr Account receivable 2,200

B.

Jun 3

Dr Account receivable 2,112

Cr Sales discount 2,112

(2,200*96%)

Jun 12

Dr Cash 2,112

Cr Account receivable 2,112

100%-4%=96%