Question

Presented below are selected transactions of Molina Company. Molina sells in large quantities to other companies and also sells its product in a small retail outlet.

 

March 1 Sold merchandise on account to Dodson Company for $10,400, terms 3/10, n/30.

March 3  Dodson Company returned merchandise worth $200 to Molina.

March 9 Molina collected the amount due from Dodson Company from the March 1 sale.

March 15 Molina sold merchandise for $1,000 in its retail outlet. The customer used his Molina credit card.

March 31  

Molina added 1.8% monthly interest to the customer’s credit card balance.

Prepare journal entries for the transactions above. (Credit account titles are automatically indented when amount is entered. Do not indent manually

Answer 1

Explanation: 

  Mar-01 Accounts Receivable 10400   

Sales revenue 10400  

Mar-03 Sales Return Allowance 200   

Accounts Receivable 200  

 

Mar-09 : Cash = 9894 (10200*97%)

Sales Discounts=  306 (  10200*3%)

Accounts receivable = ( 9894 + 306 )  10200

Mar-15 Accounts receivable 1000   

Sales revenue 1000

Mar-31: Interest Revenue   

           = (1000*1.8%*0.5) 

O.5 = 1/2 i.e. half of the month ( Mar 15 to Mar 31 ) 

 

Date Account Title & Explanation Debit ($) Credit ($) calculation

Mar-01 Accounts Receivable 10400   

Sales revenue 10400  

Mar-03 Sales Return Allowance 200   

Accounts Receivable 200  

Mar-09 Cash 9894 10200*97%

Sales Discounts 306 10200*3%

Accounts receivable 10200  

Mar-15 Accounts receivable 1000   

Sales revenue 1000  

Mar-31 Accounts receivable 9 [1000*1.8%*0.5]

Interest Revenue 9  

(interest for 15 days recorded)