Question

Dollar Co. sold merchandise to Pound Co. on account, $25,500, terms 2/15, net 45. The Pound Co. paid the invoice within the discount period. What is the sales amount to be recorded in the above transactions?

Answer 1

Answer:

Sales revenue = $25,500

sales discount = $510

net sales = $25,500 - $510 = $24,990

Explanation:

The journal entries to record this transaction should be:

XX/YY, merchandise sold on account

Dr Accounts receivable 25,500

    Cr Sales revenue 25,500

The journal entry to record the collection of the account should be:

XY/YY, collection of accounts receivable

Dr Cash 24,990

Dr Sales discount 510

    Cr Accounts receivable 25,500

Answer 2

Answer:

The sales amount to be recorded in the above transactions is $24,990

Explanation:

Term 2/15, net 45 means there is a discount of 2% available on the sale amount to the customers who will pay withing 15 days after sale with net credit period of 45 days.

As Pound Co paid the invoice with the discount period so, they will be eligible to claim the discount.

Discount amount = 25,500 x 2% = $510

Net Sales amount = $25,500 - $510 = $24,990