Question

Cycle Wholesaling sells merchandise on credit terms of 2/10, n/30. A sale for $1,050 (cost of goods sold of $625) was made to Sarah’s Cycles on February 1. Assume Cycle Wholesaling uses a perpetual inventory system. Required: 1. to 3. Record the entry for sales, cost of goods sold and cash collected on February 9 and March 2. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

1. Give the journal entry Cycle Wholesaling would make to record the sale to Sarah's Cycles.
2. Give the journal entry to record the collection of the account, assuming it was collected in full on Feb 9, 2010.
3. Give the journal entry, assuming, instead, that the account was collected in full on march 2, 2010.
4. Calculate the gross profit percentage for the sale to Sarah's Cycles, assuming the account was collected in full on Feb 9, 2010.

Answer 1

1. Give the journal entry Cycle Wholesaling would make to record the sale to Sarah's Cycles.

Part A; Entry for sale

Date	Particulars	Debit ($)	Credit ($)
1 February	Sarah’s Cycles	$1,050.00
	To Sales		$1,050.00
	(Being cycles sold to Sarah’s Cycles on credit)

              Part B: Entry for Cost of Good Sold

Date	Particulars	Debit ($)	Credit ($)
1 February	Cost of Goods Sold	$625.00
	To Inventory		$625.00
	(Being cost of goods sold recorded)

2. Give the journal entry to record the collection of the account, assuming it was collected in full on Feb 9, 2010.

Cash Collected on 9^th February

Date	Particulars	Debit ($)	Credit ($)
9 February 2010	Cash A/C	$1,050.00
	To Sarah’s Cycles		$1,050.00
	(Being cash received from Sarah’s Cycles)

3. Give the journal entry, assuming, instead, that the account was collected in full on march 2, 2010.

Cash Collected on 2^nd March instead of 9^th February

Date	Particulars	Debit ($)	Credit ($)
2 March 2010	Cash A/C	$1,050.00
	To Sarah’s Cycles		$1,050.00
	(Being cash received from Sarah’s Cycles)