Answer:
See the explanation below.
Step-by-step explanation:
1. For Juanita Construction, record the service on account on May 7 and the collection of cash on May 13.
Date Details Dr ($) Cr ($)
May 7 Account receivable 4,000
Sales revenue 4,000
To record service provided to Michael Wolfe on account
May 13 Cash 4,000
Account receivable 4,000
To record cash collected form Michael Wolfe
2. Record cash sales with a trade discount (LO5–2)
If we assume a trade discount of 2% is given by Juanita Construction to Michael Wolfe, we will have:
Trade discount = 2% * $4,000 = $80
The accounting entries will be as follows:
Date Details Dr ($) Cr ($)
May 7 Account receivable 3,920
Trade discount 80
Sales revenue 4,000
To record service provided to Michael Wolfe on account
May 13 Cash 3,920
Account receivable 3,920
To record cash collected form Michael Wolfe