Answer:
Explanation:
a. Net method
The journal entries are shown below:
January 2, 2017
Notes receivable A/c Dr $600,000 ($610,000 - $10,000)
To Sales revenue $600,000
(Being goods are sold on credit)
Cost of goods sold A/c Dr $500,000
To Inventory A/c $500,000
(Being the cost of goods sold is recorded)
On January 28, 2017
Cash A/c Dr $610,000
To Notes receivable A/c $600,000
To Sales discount A/c $10,000
(Being cash received is recorded)
b. Gross method
The journal entries are shown below:
January 2, 2017
Notes receivable A/c Dr $600,000 ($610,000 - $10,000)
To Sales revenue $600,000
(Being goods are sold on credit)
Cost of goods sold A/c Dr $500,000
To Inventory A/c $500,000
(Being the cost of goods sold is recorded)
On January 28, 2017
Cash A/c Dr $610,000
To Notes receivable A/c $600,000
(Being cash received is recorded)
