In: Accounting
Harwell Company manufactures automobile tires. On July 15, 2021,
the company sold 1,500 tires to the Nixon Car Company for $60 each.
The terms of the sale were 3/20, n/30. Harwell uses the gross
method of accounting for cash discounts.
Required:
1. Prepare the journal entries to record the
sale on July 15 (ignore cost of goods) and collection on July 23,
2021.
2. Prepare the journal entries to record the sale
on July 15 (ignore cost of goods) and collection on August 15,
2021.
Requirement 1:
Date |
Account Title & Explanation |
Debit |
Credit |
July 15,2021 |
Account Receivable – Nixon Car |
$90000 |
|
Sales Revenue |
$90000 |
||
(To record of tire sold ,1500 @ $60) |
|||
July 23,2021 |
Cash Account |
$87300 |
|
Discount ($90000 x 3%) |
$2700 |
||
Account Receivable – Nixon Car |
$90000 |
||
(To record of Payment received with in discount period) |
Requirement 2:
Date |
Account Title & Explanation |
Debit |
Credit |
July 15,2021 |
Account Receivable – Nixon Car |
$90000 |
|
Sales Revenue |
$90000 |
||
(To record of tire sold ,1500 @ $60) |
|||
Aug 15,2021 |
Cash Account |
$90000 |
|
Account Receivable – Nixon Car |
$90000 |
||
(To record of Payment received after discount period) |