Question

Exercise 7-7 (Algo) Cash discounts; the net method [LO7-3) Harwell Company manufactures automobile tires. On July 15, 2021, the company sold 2,300 tires to the Nixon Car Company for $40 each. The terms of the sale were 2/10, n/30. Harwell uses the net method of accounting for cash discounts Required: 1. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and payment on July 23, 2021. 2. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and payment on August 15, 2021 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and payment on July 23, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 > Record the sale of 2,300 tires for $40 each with a term of 2/10, n/30 under

Answer 1

Answer is given below

1. Credit Debit $90,160 $90,160 Date Journal July 15, 2021 Accounts Receivable To Sales (Being Sales recorded net of discount) July 23, 2021 Cash To Accounts Receivable (Being cash received from customer) $90,160 $90,160 2% discount is on Sales ($92,000) at 2% 2. Credit Debit $90,160 $90,160 Date Journal July 15, 2021 Accounts Receivable To Sales (Being Sales recorded net of discount) July 23, 2021 Cash To Sales discount forfeited To Accounts Receivable (Being cash received from customer Sale discount forfeited) $92,000 $1,840 $90,160