Question

On May 12, 2015, Falwell Computing sold five computers to Computing Plus for $10,000, subject to terms 3/10, n30. Falwell uses the net method of accounting for sales discounts.Required:1. Prepare the journal entry to record the sale.2. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on May 20, 2015.3. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on June 5, 2015.

Answer 1

Explanation:

The journal entries are as follows

1. Account receivable Dr $9,700

        To Sales revenue $9,700

(Being the sale is recorded)

It is computed below:

= $10,000 - $10,000 × 3%

= $10,000 - $300

= $9,700

2. Cash Dr $9,700

         To Account receivable $9,700

(Being the receipt of the payment is recorded)

3. Cash Dr $10,000

         To Account receivable $9,700

          To Sales discount forfeited $300

(Being the receipt of the payment is recorded)