Question

Tracy Company, a manufacturer of air conditioners, sold 200 units to Thomas Company on November 17, 2021. The units have a list price of $520 each, but Thomas was given a 25% trade discount. The terms of the sale were 2/10, n/30.

Exercise 7-5 (Algo) Part - 2

3-a. Prepare the journal entries to record the sale on November 17 (ignore cost of goods) and collection on November 26, 2021, assuming that the net method of accounting for cash discounts is used.
3-b. Prepare the journal entries to record the sale on November 17 (ignore cost of goods) and collection on December 15, 2021, assuming that the net method of accounting for cash discounts is used.

Answer 1

3-a.

Date	General Journal	Debit	Credit
November 17, 2021	Account receivables	$76,440
	... Sales revenue (200 * $520 * 75% * 98%)		$76,440
	(Being good sold on credit)
November 26, 2021	Cash	$76,440
	...Accounts receivables		$76,440
	(Being payment received)

3-b.

Date	General Journal	Debit	Credit
November 17, 2021	Accouts receivable	$76,440
	.... Sales revenue		$76,440
	(Being good sold on credit)
December 15, 2021	Cash (200 * $520 * 75%)	$78,000
	... Interest revenue		$1,560
	... Accounts receivable		$76,440
	(Being payment received)