Question

Assume that Blossom Company received the balance due from Ayayai Co. on January 2 of the following year instead of December 13. Prepare the journal entry to record the receipt of payment on January 2.

Answer 1

See explanation

Step-by-step explanation:

If Blossom Company received on December 13 (Assuming perpetual inventory system was used), the journal entry to record the receipt -

Debit Cash $466,970

Debit Sales Discount $9,530

Credit Accounts receivable $476,500

Giving 2% discount to the customer after the sales return and allowances because the customer paid the amount within the terms 2/10, n/30.

As the customer failed to pay on December 13 and paid on January 2, the company did not receive the sales discount. And the following journal entry will be required -

Debit Cash $476,500

Credit Accounts receivable $476,500

After deducting the sales returns, Blossom company will receive the payment.