Question

Presented below is information from Headland Computers.

July 1- Sold R$20,400 of computers to Smallwood Company with terms 3/15, n/60. Headland uses the gross method to record cash discounts.

10- Headland received payment from Smallwood for the full amount owed from the July transactions.

17- Sold R$204,000 in computers and peripherals to The Hernandez Store with terms of 2/10, n/30.

30- The Hernandez Store paid Headland for its purchase of July 17 Prepare the necessary journal entries for Headland Computers. (There should be four total entries).

Answer 1

Journal entries for Headland Computers' transactions include recording the sale of computers to Smallwood and Hernandez Store and the receipt of payments with applied cash discounts.

Step-by-step explanation:

The question requires the creation of journal entries for transactions made by Headland Computers. Here are the journal entries based on the provided information:

1. July 1: Debit Accounts Receivable R$20,400; Credit Sales Revenue R$20,400 (Sale of computers to Smallwood Company).
2. July 10: Debit Cash R$19,788; Debit Sales Discounts R$612; Credit Accounts Receivable R$20,400 (Receipt of payment within the discount period).
3. July 17: Debit Accounts Receivable R$204,000; Credit Sales Revenue R$204,000 (Sale of computers to The Hernandez Store).
4. July 30: Debit Cash R$199,920; Debit Sales Discounts R$4,080; Credit Accounts Receivable R$204,000 (Receipt of payment within the discount period).

For the transactions on July 10th and 30th, the payments received were within the discount period, meaning the customers took advantage of the sales discounts offered.