Question

On July 1, 2019 AG Inc. made a $25,000 sale on account to RA Inc. with the following terms: 2/15, n/45. On July 8th they accepted a return from RA, Inc of $7,000. On July 10th RA, Inc. paid the balance due. What is the entry that AG inc, made to record the payment assuming that AG uses: a) The gross method b) the net method

Please help with these problems.

Answer 1

Hey Dear,

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I have tried to give best possible answer. Please feel free to ask any of your doubts.

And please excuse my bad hand writings.

ANSE (a) credit Date Julyel 2019 Journal entre os per Gross Methods __ Accounts Debit RA Inc. Al Do $25.000 To sares AC (Being sares made to RA inc) $ 25000 July 8 2019 sares Returen All Dr $7000 TO RA INC. ALL $7000 CBeing sales returned by RA Inc.) July-1o 2014 Cash/Bank Al sares Discount All (18000 K2%) To RA Inc. All or Dr. $17640 $ 18000 (Being payment received

credit $24500 (6) Journal entry as per Net method : Date Account Debit July 1 2019 RA Inc ALL at $ 24500 ($25000 -2% of 25000) To sares All c Being sales made to Raine with net of discount) Jury 8 2019 Sares return All D3 $ 6860 67000 - 24: 04_7000) TORA Inc. All (Being sones returned by RA Ince with net of discount) July-10 2019 Cash/Bank All Ar $17640 TO RA Inc. All ( Being payment received) $ 6860 $ 17640

If you want to know more about the gross method and net method, please mention in comment. I will definitely update the same.

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