Requirement 3a: (Net method & Cash received within discount period)
Date | Account title and Explanation | Debit | Credit |
Nov 17,2021 | Accounts receivable [40,000 x 0.97] | $38,800 | |
Sales revenue | $38,800 | ||
[To record credit sales] | |||
Nov 26,2021 | Cash | $38,800 | |
Accounts receivable | $38,800 | ||
[To record collections from customers] |
Requirement 3b: (Net method & Cash received after discount period)
Date | Account title and Explanation | Debit | Credit |
Nov 17,2021 | Accounts receivable | $38,800 | |
Sales revenue | $38,800 | ||
[To record credit sales] | |||
Dec 15,2021 | Cash | $40,000 | |
Discount lost [40,000 x 0.03] | $1,200 | ||
Accounts receivable | $38,800 | ||
[To record collections from customers] |
Calculations:
Sales revenue = 125 units x [$400 - ($400 x 20% trade discount)]
= 125 units x [$400 - $80]
= 125 units x $320
= $40,000
Tracy Company, a manufacturer of air conditioners, sold 125 units to Thomas Company on November 17,...
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