Harwell Company manufactures automobile tires. On July 15, 2021, the company sold 1,500 tires to the...

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.

Solutions

Expert Solution

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)

ekkarill92 answered 1 year ago

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