Question

On June 3, Novak Company sold to Chester Company merchandise having a sale price of $3,100 with terms of 2/10, n/60, f.o.b. shipping point. An invoice totaling $99, terms n/30, was received by Chester on June 8 from John Booth Transport Service for the freight cost. On June 12, the company received a check for the balance due from Chester Company.Prepare journal entries on the Sage Company books to record all the events noted above under each of the following bases.

(1) Sales and receivables are entered at gross selling price.
(2) Sales and receivables are entered at net of cash discounts.
(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 the amount is entered. Do not indent manually.)
No.
Date Account Titles and Explanation Debit Credit
(1)
June 3June 12
June 12
(2)
June 3June 12 June 3June 12
SHOW LIST OF ACCOUNTS
LINK TO TEXT
Prepare the journal entry under basis 2, assuming that Chester Company did not remit payment until July 29. (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 the amount is entered. Do not indent manually.)
Date Account Titles and Explanation Debit Credit
July 29
SHOW LIST OF ACCOUNTS
LINK TO TEXT

Answer 1

(a) Date Account Titles & Explanation Debit Credit

1. Jun-03 Accounts Receivable-Chester Company $3,100

Sales $3,100

(To record sales)

Jun-12 Cash $3,038

Sales Discounts $62

(3,100*2%)

Accounts ReceivableChester Company $3,100

(To record payment received)

2. Jun-03 Accounts Receivable-Chester Company $3,038

($3,100*0.98)

Sales $3,038

(To record sales)

Jun-12 Cash $3,038

Accounts Receivable-Chester Company $3,038

(To record payment received)

(b) Date Account Titles & Explanation Debit Credit

Jul-29 Cash $3,100

Accounts Receivable—Chester Company $3,038

Sales Discounts Forfeited $62

(To record payment received)