Question

On June 3, Skysong Company sold to Chester Company merchandise having a sale price of $5,900 with terms of 3/10, n/60, f.o.b. shipping point. An invoice totaling $96, 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. Collapse question part (a) Prepare journal entries on the Skysong 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.

Answer 1

Answer:

Explanation:

The journal entries are shown below:

1.

On June 3

Accounts receivable A/c Dr $5,900

        To Sales A/c                                 $5,900

(Being goods are sold on credit)

On June 12

Cash A/c Dr $5,723

Sales discount A/c Dr $177

     To Accounts receivable A/c  $5,900

(Being cash is received)

The cash is computed below:

= $5,900 × 0.97 = $5,723

And, the rest 0.03 is charged to sales discounts

2.

On June 3

Accounts receivable A/c Dr $5,723

        To Sales A/c                                 $5,723

(Being goods are sold on credit)

On June 12

Cash A/c Dr $5,723

     To Accounts receivable A/c  $5,723

(Being cash is received)