Question

On June 3, Sheffield Company sold to Chester Company merchandise having a sale price of $4,600 with terms of 2/10, n/60, f.o.b. shipping point. An invoice totaling $94, terms n/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.

Prepare journal entries on the Sheffield Company books to record all the events noted above under each of the following bases. (1) Sales and receivables are entered at gross selling price. (2) Sales and receivables are entered at net of cash discounts. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) No. Date Account Titles and Explanation Debit Credit June 12 (2)

Answer 1

Solution:

Requirement 1:

No.	Date	Account title and explanation	Debit	Credit
1	June. 3	Account Receivable - Chester Co.	$        4,600
		Sales Revenue		$        4,600
		(Being sales made on account)
	June. 12	Bank	$        4,508
		Sales Discount ($ 4,600*2/100)	$              92
		Account Receivable - Chester Co.		$        4,600
		( Being accounts receivables collected)
2	June. 3	Account Receivable - Chester Co.	$        4,508
		Sales Discount ($ 4,600*2/100)	$              92
		Sales Revenue		$        4,600
		(Being sales made on account)
	June. 12	Bank	$        4,508
		Account Receivable - Chester Co.		$        4,508
		( Being accounts receivables collected)

Notes:

1) Freight will be paid by buyer because FOB is shipping point.

Requirement 2:

Date	Account title and explanation	Debit	Credit
July. 29	Bank	$    4,600
	Sales Discount Forfeited		$          92
	Account Receivable - Chester Co.		$    4,508
	( Being accounts receivables collected)