(a)
Sales discounts:
The term
Gross method:
Under this method, the revenues are recorded at gross amount of sales i.e. without taking the effect of any discount at the time of sales.
The journal entries for Nevada for recording the sales at gross.
Answer to Problem 78E
The journal entries for sales transactions at gross amount is debiting the
Explanation of Solution
The Nevada provides services at
The
Date | Particulars | Debit ($) | Credit ($) |
Accounts Receivable...... Sales.......... (Record the sales of service) |
(b)
Sales discounts:
The term
Gross method:
Under this method, the revenues are recorded at gross amount of sales i.e. without taking the effect of any discount at the time of sales.
The journal entry for the receiving payment within
Answer to Problem 78E
The
Explanation of Solution
The Nevada provides services at
The journal entry for Nevada is as follows:
Date | Particulars | Debit ($) | Credit ($) |
Cash......... Sales discount…...... Accounts Receivable..... (Record the receiving of revenue of service contact within the discount period of |
(c)
Sales discounts:
The term
Gross method:
Under this method, the revenues are recorded at gross amount of sales i.e. without taking the effect of any discount at the time of sales.
The journal entry for the receiving payment after
Answer to Problem 78E
The adjusting entry for recording the payment receivable of sales is by debiting cash by
Explanation of Solution
The Nevada provides services at
The journal entry for Sims is as follows:
Date | Particulars | Debit ($) | Credit ($) |
Cash......... Accounts Receivable..... (Record the receiving of revenue of service contact within the discount period of |
(d)
Sales discounts:
The term
To calculate:
The amount of interest the customer of Nevada be willing to pay for taking benefit of discount period.
Answer to Problem 78E
The amount of interest will be
Explanation of Solution
If the customer of Nevada did not pay the amount of
Want to see more full solutions like this?
Chapter 5 Solutions
Cornerstones of Financial Accounting
- Prepare journal entries for the following sales and cash receipts transactions. (a) Merchandise is sold on account for 300 plus 3% sales tax, with 2/10, n/30 cash discount terms. (b) Part of the merchandise sold in transaction (a) for 70 plus sales tax is returned for credit. (c) The balance on account for the merchandise sold in transaction (a) is paid in cash within the discount period.arrow_forwardAnswer the following items on the space provided. Show your computations as necessary.. Case 1 Yusuke Corporation records its purchases at gross amounts but wishes to change to recording of purchases net of purchase discounts. Discounts on purchases recorded from January 1, 20x1 to December 31, 20x1 totaled P80,000. Of this amount, P8,000 is still available in the accounts payable balance. the balances in Yusuke's accounts as of and for the year ended December 31, 20x1, before conversion are: Purchases P4,000,000 32,000 1,200,000 Purchase discounts Accounts payable Required: 1. The amount of purchase discounts lost to be recognized is 2. Accounts payable balance should be reduced by 3. The purchases account should be reduced by 4. Prepare the entry to record the conversion. Case 2 Summer Company offers a set of building blocks to customers who send in three (3) UPC codes from Summer cereal, along with P50.00. The blocks sets cost Summer P110 each to purchase and P60 each to mail to…arrow_forwardSales-Related Transactions After the amount due on a sale of $22,400, terms 1/10, n/eom, is received from a customer within the discount period, the seller consents to the return of the entire shipment for a cash refund. The cost of the merchandise returned is $13,440. a. What is the amount of the refund owed to the customer? b. Journalize the entries made by the seller to record the return and the refund. If an amount box does not require an entry, leave it blank.arrow_forward
- The entry to record the receipt of payment within the discount period on a sale of $2400 with terms of 2/8, n/30 will include a Answer- credit to accounts receivable for $2400 Kingbird, Inc. purchased merchandise inventory with an invoice price of $13100 and credit terms of 2/10, n/30. What is the net cost of the goods if Kingbird, Inc. pays within the discount period? Answer- 12,838 Just tell me the difference between the phrasing of the two questions. In other words, why don't I multiply 0.02 percent to 2,400 and then subtract $48 to get 2352 debit to sales revenue for the first question?arrow_forwardSales Discount Recorded Columbia Company provided services with a list price of $48,500 to Small Enterprises with terms 2/15, n/45. Columbia records sales to be reported in the financial statements. Required: 1. Prepare the entries to record this sale in Columbia's journal. (Record sale) 2. Prepare the entry for Columbia's journal to record receipt of cash in payment for the sale within the discount period. For those boxes in which no entry is required, leave the box blank. (Record collection within discount period) 3. Prepare the entry for Columbia's journal to record receipt of cash in payment for the sale after the discount period. (Record collection after discount period) 4. Assume that Columbia's customer does not have the available cash to pay Columbia within the discount period. How much interest should the customer be willing to pay for…arrow_forwardPresented below are transactions related to Crane, Inc. May 10 (a) Purchased goods billed at $15,800 subject to cash discount terms of 2/10, r/60. Purchased goods billed at $13,800 subject to terms of 1/15, n/30. Paid invoice of May 10. Purchased goods billed at $10,300 subject to cash discount terms of 2/10, r/30. Your answer is partially correct. Prepare general journal entries for the transactions above under the assumption that purchases are to be recorded at net amounts after cash discounts and that discounts lost are to be treated as financial expense. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List all debit entries before credit entries.) Date Account Titles and Explanation Accounts Payable Inventory Accounts Payable Debit 15800 13800 Credit 10arrow_forward
- The journal entry to record the receipt of a payment from customer within the discount period on a sale of $2325 with terms of 3/10, n/30 will include a credit to O a. Sales discounts for $70 O b. Accounts receivable for $2325 O c. Sales Revenue for $2325 O d. Cash for $2255arrow_forwardSanta Fe Retailing purchased merchandise from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $24,000. The merchandise had cost Mesa $16,000. Assume that both buyer and seller use a perpetual inventory system and the gross method. 1. Prepare entries that the buyer records for the (a) purchase, (b) cash payment within the discount period, and (c) cash payment after the discount period. 2. Prepare entries that the seller records for the (a) sale, (b) cash collection within the discount period, and (c) cash collection after the discount period. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare entries that the seller records for the (a) sale, (b) cash collection within the discount period, and (c) cash collection after the discount period. View transaction list Journal entry worksheetarrow_forwardThe entry to record the receipt of payment within the discount period on a sale of $1500 with terms of 1/10, n/30 will include a credit to Cash for $1485. Accounts Receivable for $1500. ● Sales Revenue for $1500. ● Sales Discounts for $15.arrow_forward
- Prepare the Journal Entries for the following purchase transactions: I. Purchase of merchandise for cash:a. Merchandise is purchased for cash, P35,000b. Merchandise listed at P50,000, subject to a trade discount of 10%, is purchased for cash. II. Purchase of merchandise on account:a. Merchandise purchased on account, credit terms 2/10, n/30, P40,000.b. Merchandise purchased on account, credit terms 3/10, n/30, P28,000.c. Payment is made on invoice (a) within the discount period.d, Payment is made on invoice (b) beyond the discount period.arrow_forwardSanta Fe Retailing purchased merchandise from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $24,000. The merchandise had cost Mesa $16,000. Assume that both buyer and seller use a perpetual inventory system and the gross method. 1. Prepare entries that the buyer records for the (a) purchase, (b) cash payment within the discount period, and (c) cash payment after the discount period. 2. Prepare entries that the seller records for the (a) sale, (b) cash collection within the discount period, and (c) cash collection after the discount period. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare entries that the buyer records for the (a) purchase, (b) cash payment within the discount period, and (c) cash payment after the discount period. View transaction list Journal entry worksheetarrow_forwardSanta Fe Retailing purchased merchandise from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $28,500. The merchandise had cost Mesa $19,437. Assume that both buyer and seller use a perpetual Inventory system and the gross method. 1. Prepare entries that the buyer records for the (a) purchase, (b) cash payment within the discount period, and (c) cash payment after the discount period. 2. Prepare entries that the seller records for the (a) sale, (b) cash collection within the discount period, and (c) cash collection after the discount period. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare entries that the buyer records for the (a) purchase, (b) cash payment within the discount period, and (c) cash payment after the discount period. View transaction list Journal entry worksheetarrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningCollege Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,