Question

Ананні пи Exercise 7-5 On June 3, Teal Company sold to Chester Company merchandise having a sale price of $5,600 with terms of 2/10, V60, fo.b. shipping point. An invoice totaling 593, terms 130, 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 Teal Company books to record at 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 for the amounts. Credi Indent manually) automatically indented when the amount is entered. Do not Account Titles and Explanation Debit Credit (1) June Accounts Receivable Sales Revenue June 12 Sales Discounts Type here to search ORI 805 PM

Answer 1

Teal Company (1) Sales and receivables are entered at gross selling price. Jun 3 Account receivable Sales 5,600 5,600 Jun 12 cash Sales discount (5,000*2%) Account receivable 5,488 112 1 5,600 (2) Sales and receivables are entered at net cash discounts. Jun 3 5,488 Account receivable Sales discount (5,000*98%) 5,488 Jun 12 5,488 cash Account receivable 5,488 (b) Prepare the journal entry under basis 2, assuming that Chester Company did not remit payment until July 29. Jul 29 1 5 ,600 cash Account receivable Sales discount 5,488 112