Question

Bramble Company sells goods to Danone Inc. by accepting a note receivable on January 2, 2020. The goods have a sales price of $569,900 (cost of $500,000). The terms are net 30. If Danone pays within 5 days, however, it receives a cash discount of $9,900. Past history indicates that the cash discount will be taken. On January 28, 2020, Danone makes payment to Bramble for the full sales price.

Required:
Prepare the Journal entry(ies) to record the sale and related cost of goods sold for Jupiter Company on January 2, 2020.

Answer 1

Because past history has shown that Danone will take the cash discount, it will be removed from the journal entry:

= Notes payable - discount

= 569,900 - 9,900

= $560,000

Date Account Title Debit Credit

Jan. 2, 2020 Notes Receivable $560,000

Sales Revenue $560,000

Cost of Goods sold $500,000

Inventory $500,000