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Valuation of accounts receivables with discounts and returns HEB Inc. has $200,000 of credit sales Terms...

Valuation of accounts receivables with discounts and returns

HEB Inc. has $200,000 of credit sales

Terms of sale – 2/10, n/40

Journal entries:

Net Method

Dr.

Cr.

Money received during discount period

Dr.

Cr.

Money received after discount period

Dr.

Cr.

Gross Method

Dr.

Cr.

Money received during discount period

Dr.

Cr.

Money received after discount period

Dr.

Cr.

Solutions

Expert Solution

Gross Method

Debtor/ Account rec. A/c Dr. $200000

To Credit sales A/c $200000

(Credit sales made)

Money received during discount period

Cash A/c Dr. $196000

Discount Allowed A/c Dr. $ 4000

To Account recievable A/c $200000

(Money recieved from debtor)

Money recieved after discount period

Cash A/c Dr. $200000

To Debtor A/c $200000

(Cash realised on sales)

Net Method

Accounts rec. A/c Dr. $196000

To credit sales A/c $196000

(Credit sales made)

Money received during discount period

Cash A/c Dr. $196000

To Debtors A/c $196000

(Cash realised from debtor)

Money received after discount period

Cash A/c Dr. $200000

To Discount reversed (income) A/c $4000

To account rec. A/c $196000

(Amount realised after discount period)

ekkarill92 answered 1 year ago

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