Question

Cornerstone Exercise 5-24 (Algorithmic) Sales Discounts Not Token Bolton sold a customer service contract with a price of $40,000 to Sammy's Wholesale Company. Bolton offered terms of 1/10, 1/30 and expects Sammy to pay within the discount period. Required: Prepare the journal entry assuming the payment is made after 10 days after the discount period). If an amount box does not require an entry, leave it blank. Cash 39,600 Sales Discounts x 400 Accounts Receivable 40,000 X Record collection within discount period Feedback Check My Work The gross method records the receivable at the gross (or undiscounted) price. The discount is then recognized if payment is made within the discount period. If payment is not received until after the discount period, the full amount is paid

Answer 1

Account Titles and Explanation	Debit	Credit
Cash	$40,000	-
Sales revenue ($40,000 X 1%)	-	$400
Account receivable ($40,000 X 99%)	-	$39,600
(To record cash received form credit sales)