Question

On April 1, Pane makes a credit sale to Gane Co. and requires Gane to sign a $50,000, 2-year (24-month) note. Interest of 12% is to be assessed in addition to the face value of the note and collected at maturity. The cost of the inventory sold totals $38,000.

On May 1, Pane sells $30,000 of stained windows with terms 2/10, n/30. The cost of the inventory equals $19,000 and the company uses a perpetual inventory system. Pane records the total invoice price at the time of sale (i.e., Pane uses the gross method to record the sale). On May 8, Pane made collections on sales originally billed for $14,000, and on May 31, Pane collected on additional sales originally billed for $16,000.

Answer 1

Date	Account Titles	Debit	Credit
Apr. 1	Notes Receivable	$           50,000
	Sales Revenue		$           50,000
	Cost of Goods Sold	$           38,000
	Inventory		$           38,000
May. 1	Accounts Receivable	$           30,000
	Sales Revenue		$           30,000
	Cost of Goods Sold	$           19,000
	Inventory		$           19,000
May. 8	Cash	$           13,720
	Sales Discount	$                 280
	Accounts Receivable		$           14,000
May. 31	Cash	$           16,000
	Accounts Receivable		$           16,000