Question

Stellar plc uses the gross method to record sales made on credit. On June 1,2022 , it made sales of £48,000 with terms 2/15,n/45. On June 12,2022 , Stellar received full payment for the June 1 sale. Prepare the required journal entries for Stellar plc. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Answer 1

The required journal entries for Stellar plc would be to debit Accounts Receivable and Sales for £48,000 on June 1, 2022, and to debit Cash for £47,040, Discount Allowed for £960, and credit Accounts Receivable for £48,000 on June 12, 2022.

Step-by-step explanation:

The journal entries for Stellar plc would be as follows:

1. 1. June 1, 2022: Debit Accounts Receivable £48,000 and Credit Sales £48,000
   2. June 1, 2022: Debit Cash £47,040, Debit Discount Allowed £960, and Credit Accounts Receivable £48,000 (to record payment with discount)

This entry accounts for the full payment, where a 2% discount is forfeited (£48,000 * 2%).