Coyote Company sold a merchandise costing $30,000 for $50,000 on credit to Beer Company on 4/1/2020....

Coyote Company sold a merchandise costing $30,000 for $50,000 on credit to Beer Company on 4/1/2020. To expedite the cash payment, Coyote offered a cash discount of 3/15, n/30.

Instructions: prepare any necessary journal entries for the following transactions for the seller and the buyer using the net method.

The credit sale on 4/1/2020.
A receipt of the full payment if it is paid on 4/10/2020.
A receipt of the full payment if it is paid on 4/24/2020.

Solutions

Expert Solution

In the books of Seller
Journal entries
S.no.	Accounts title and explanations		Debit $	Credit $
a.	Accounts receivable			48,500
	Sales revenue	(50000-3%)		48,500
	(for sales made on account)
	Cost of goods sold			30,000
	Merchandise inventory			30,000
	(for cost of goods sold)
b.	Cash account			48,500
	Accounts receivable			48,500
	(for cash received)
c.	Cash account			50000
	Accounts receivable			48500
	Sales revenue				1500
	(for cash received after discount period)


In the books of Buyer
Journal entries
S.no.	Accounts title and explanations		Debit $	Credit $
a.	Merchandise Inventry		48,500
	Accounts payable	(50000-3%)		48,500
	(for purchase made on account)
b.	Accounts payable			48,500
	Cash account				48,500
	(for cash paid)
c.	Accounts payable			48,500
	Merchandise Inventry		1500
	Cash account				50,000
	(for cash paid after discount period)

ekkarill92 answered 1 year ago

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