Question

On March 12, Medical Waste Services provides services on account to Grace Hospital for $10,900, terms 3/10, n/30. Grace pays for those services on March 20.

Required:
For Medical Waste Services, record the service on account on March 12 and the collection of cash on March 20.

Answer 1

March 12

Dr Accounts Receivable 10,900

Cr Service Revenue 10,900

March 20

Dr Cash 10,673

Dr Sales Discounts 327

Cr Accounts Receivable 10,900

Step-by-step explanation:

Preparation of the Journal entry For Medical Waste Services,on March 12 and the collection of cash on March 20.

Journal entry to record the service on account on March 12

Since we were told that Medical Waste Services provides services on account to Grace Hospital for $10,900 on March 12, this means the transaction will be recorded as:

March 12

Dr Accounts Receivable 10,900

Cr Service Revenue 10,900

Journal entry to record the collection of cash on March 20.

Since we were told that Grace pays for those services on March 20 for the terms of 3/10, n/30 this means that the transaction will be recorded as:

March 20

Dr Cash 10,673

(10,900-327)

Dr Sales Discounts 327

(10,900×3%)

Cr Accounts Receivable 10,900