Question

• 6) ABC Company sold DEF company shoes for $67,000 on account. The shoes cost ABC $30,000. Write the journal entries for both ABC and DEF showing the sale by ABC followed by the receipt of payment & the purchase by DEF followed by the payment to ABC.
• 7) ABC Company sold DEF company shoes for $67,000 on account on terms 2/10 net 30. The shoes cost ABC $30,000. Write the journal entries for both ABC and DEF showing the sale by ABC followed by the receipt of payment & the purchase by DEF followed by the payment to ABC. They paid with the discount period.

Please create journal entries.  

Answer 1

6

Account	Debit	Credit
ABC Company:
Accounts receivable	$       67,000
Sales revenue		$       67,000
Cost of goods sold	$       30,000
Inventory		$       30,000
[Entry for sale]
Cash	$       67,000
Accounts receivable		$       67,000
[Entry for receipt]
DEF Company:
Inventory	$       67,000
Accounts payable		$       67,000
[Entry for purchase]
Accounts payable	$       67,000
Cash		$       67,000
[Entry for payment]

7

Discount = 67,000 X 2% = 1,340

Account	Debit	Credit
ABC Company:
Accounts receivable	$       67,000
Sales revenue		$       67,000
Cost of goods sold	$       30,000
Inventory		$       30,000
[Entry for sale]
Sales discounts	$          1,340
Cash	$       65,660
Accounts receivable		$       67,000
[Entry for receipt with in discount period]
DEF Company:
Inventory	$       67,000
Accounts payable		$       67,000
[Entry for purchase]
Accounts payable	$       67,000
Cash		$       65,660
Purchase discounts		$          1,340
[Entry for payment]