Question

Question No. 5:       (LO6)                                                                        

1. Smart Co Sales made on credit. On July 1, 2018 it made sales of $60 000 with the term 3/10, n/30. On July 9, 2018 Smart Co received $30000 payment for July 1 sales. Remaining Payment received by smart Co on 15th July, 2018.

Requirement:

Record the Journal Transaction with discount amount with Gross Method and Net Method.

Answer 1

Gross Method :
Date	Account Titles and Explanations	Debit	Credit
July 1 , 2018	Account Receivable Debit	$ 60,000
	To Sales Revenue A/c		$ 60,000
	(Goods sold
July 9,2018	Cash A/c Debit	$ 30,000
	Discount A/c Debit	$ 927
	To Account Receivable		$ 30,927
	(received part payment and discount given)
July 15, 2018	Cash A/c Debit	$ 29,073
	To Account Receivable		$ 29,073
	(Remaining Cash Received)

Invoice amount = 30,000 * (100 / 97) = 30,927

Remaining cash = 60,000 - 30,927 = 29,073

Net Method :
Date	Account Titles and Explanations	Debit	Credit
July 1 , 2018	Account Receivable Debit	$ 58,200
	To Sales Revenue A/c		$ 58,200
	( Goods sold on account )
July 9,2018	Cash A/c Debit	$ 30,000
	To Account Receivable		$ 30,000
	( partial payment received . )
July 15, 2018	Cash A/c Debit	$ 29,073
	To Account Receivable		$ 28,200
	To Discount Forfeited		$ 873
	( Cash Received on settlement )

Accounts receivables under net sales method = $ 60,000 - 1,800 = $ 58,200

forfeited Discount = 1,800 - 927 = 873