Question

Required information Exercise 7-5 (Algo) Trade and cash discounts; the gross method and the net method compared [LO7-3) The following information applies to the questions displayed below! Tracy Company, a manufacturer of air conditioners, sold 100 units to Thomas Company on November 17, 2021. The units have a list price of $800 each, but Thomas was given a 25% trade discount. The terms of the sale were 2/10,n/30. Exercise 7-5 (Algo) Part1 Required: 1. Prepare the journal entries to record the sale on November 17 (ignore cost of goods) and collection on November 26, 2021, assuming that the gross method of accounting for cash discounts is used 2. Prepare the journal entries to record the sale on November 17 (ignore cost of goods) and collection on December 15, 2021, assuming that the gross method of accounting for cash discounts is used Complete this question by entering your answers in the tabs below: Reg 1 Reg 2 Prepare the journal entries to record the sale on November 17 (ignore cost of goods and collection on November 26, 2021, assuming that the gross method of accounting for cash discounts is used. (If no entry is required for a transaction/event, select "No journal entry required in the first account field.) View transaction list

Answer 1

Part 1

Date	General Journal	Debit	Credit
1.
Nov.17	Accounts receivable (100*$800)	$80,000
	Sales		$80,000
Nov.26	Cash (80,000*98%)	$78,400
	Trade discount (80,000*2%)	1,600
	Accounts receivable		$80,000
2.
Nov.17	Accounts receivable	$80,000
	Sales		$80,000
Dec.15	Cash	$80,000
	Accounts receivable		$80,000

Part 2.

Date	General Journal	Debit	Credit
3a.
Nov.17	Accounts receivable ($80,000*98%)	$78,400
	Sales		$78,400
Nov.26	Cash	$78,400
	Accounts receivable		$78,400
2.
Nov.17	Accounts receivable	$78,400
	Sales		$78,400
Dec.15	Cash	$80,000
	Interest income		$1,600
	Accounts receivable		78,400