Question

On June 3. Sheridan Company sold to Chester Company merchandise having a sale price of $5,600 with terms of 2/10,n/60, fo.b. shipping point. An invoice totaling $93, terms 1/30, 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, (a) Your answer is correct Prepare journal entries on the Sheridan Company books to record all the events noted above under each of the following bases. (1) (2) Sales and receivables are entered at gross selling price. Sales and receivables are entered at net of cash discounts.

Answer 1

Answer

General Journal

No.	Date	Account Title & Explanation	Debit	Credit
1)	June-3	Account Receivable Dr.	$ 5,600
		To Sales		$ 5,600
		(To Record Sales on Account)
	June-12	Cash Dr. ($ 5,600 - $ 112)	$ 5,488
		Sale Discount Dr. ($ 5,600 * 2%)	$ 112
		To Account Receivable		$ 5,600
		(To Record the receipt of Payment)
2)	June-03	Account Receivable Dr. ($5,600 * 98%)	$ 5,488
		To Sales ($5,600 * 98%)		$ 5,488
		(To Record Sales on Account)
	June-12	Cash Dr.	$ 5,488
		To Accounts Receivable		$ 5,488
		(To Record the Receipt of Payment)

No.	Date	Account Title & Explanation	Debit	Credit
3)	July-29	Cash Dr.	$ 5,600
		To Accounts Receivable		$ 5,488
		To Sales Discount Forfeited		$ 112
		(To record the receipt of payment)