Question

Journal Entries for Blue Spruce Company

Transactions:
Sold merchandise on account to Wholesale Company for $10,000, terms 2/10, n/30.
Sold merchandise for cash to Retail Customer for $2,500.
Collected payment from Wholesale Company within the discount period.
Made a $1,000 purchase of merchandise from Supplier on account, terms 1/10, n/30.
Paid Supplier within the discount period.
Required:
Prepare journal entries for each of the above transactions.

Answer 1

The journal entries for the transactions are as follows: 1) Accounts Receivable - Wholesale Company 10,000, Sales 10,000. 2) Cash 2,500, Sales 2,500. 3) Cash (amount collected) 9,800, Accounts Receivable - Wholesale Company 200, Sales Discount 10. 4) Inventory 1,000, Accounts Payable - Supplier 1,000. 5) Accounts Payable - Supplier 990, Inventory 10, Cash (amount paid) 980.

Step-by-step explanation:

The journal entries for the transactions are as follows:

1. Journal Entry for selling merchandise on account to Wholesale Company:
2. Accounts Receivable - Wholesale Company 10,000
3. 
   
4. Sales 10,000
5. Journal Entry for selling merchandise for cash to Retail Customer:
6. Cash 2,500
7. 
   
8. Sales 2,500
9. Journal Entry for collecting payment from Wholesale Company within the discount period:
10. Cash (amount collected) 9,800
11. 
    
12. Accounts Receivable - Wholesale Company 200
13. 
    
14. Sales Discount 10
15. Journal Entry for making a purchase of merchandise from Supplier on account:
16. Inventory 1,000
17. 
    
18. Accounts Payable - Supplier 1,000
19. Journal Entry for paying the Supplier within the discount period:
20. Accounts Payable - Supplier 990
21. 
    
22. Inventory 10
23. 
    
24. Cash (amount paid) 980