Question

Prepare journal entries for the following transactions for Chillee Company: A. Chillee sold consulting services on account to a customer RST for $3,000, terms 2/10, n/30. B. Customer RST was not completely satisfied with the services he received, so Chillee granted an allowance of $200. C. The customer RST paid the amount owed to Chillee within the discounted period. D. Chillee lent $1000 to an employee who signed a 2 month note with an interest rate of 10% E. The employee in "d" above paid the note plus interest at the end of the second month.

Answer 1

Solution:

Journal Entries

Transaction	General Journal	Debit	Credit
A	Account Receivable	$        3,000.00
	Service Revenue		$      3,000.00
	( To record service on account)
B	Service/Sales Allowance	$            200.00
	Accounts Receivable		$          200.00
	( To record service allowance)
C	Accounts Receivable	$        2,800.00
	Sales Discount [2800*2/100]		$            56.00
	Cash [ 2800- 56 ]		$      2,744.00
	( To record sales returns)
D	Notes Receivables-Short Term [@10%, 2 Month]	$        1,000.00
	Cash		$      1,000.00
	( To record notes receivables grant to employee)
E	Cash	$        1,016.67
	Notes Receivables-Short Term [@10%, 2 Month]		$      1,000.00
	Interest Revenue [1000*10/100*2/12]		$            16.67
	( To record notes receivables collection)