Question

 Teal Company sells goods to Danone Inc, by accepting a note receivable on January 2, 2017. The goods have a sales price of 3589,900 (cost of 510,000). The terms are net 30. If Danone pays within 5 days, however, it receives a cash discount of $9,900. Past history indicates that the cash discount will be taken. On January 28, 2017, Danone makes payment to Teal for the full sales price.

 Prepare the Journal entry(less) to record the sale and related cost of goods sold for Teal Company on January 2, 2017, and the payment on January 28, 2017. Assume that Teal Company reconds the January 2, 2017, transaction using the net method. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.)

Answer 1

Net Method - Under the net method of accounting for sales, sales revenue should be recorded at discounted sales value.

Discounted sales value = Gross sale invoice value - Discount

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Date	Account Titles and Explanation	Debit	Credit
Jan. 02, 2017	Notes Receivable              [$589,900 - $9,900]	$580,000
	Sales revenue / Sales		$580,000
	(To record sales)
	Cost of Goods Sold	$510,000
	Inventory / Merchandise inventory		$510,000
	(To record cost of goods sold)
Jan. 28, 2017	Cash                [Full sales price]	$589,900
	Notes Receivable		$580,000
	Sales discount forfeited / Sales revenue		$9,900
	(To record payment received)