Answer:
Dr Accounts receivable $77,000
Cr Sales $77,000
Payment within discount period:
Dr Cash $75,460
Dr Discount allowed $1540
Cr Accounts receivable $77,000
When payment is not made within discount period, the necessary entries would be:
Dr Accounts receivable $77,000
Cr Sales $77,000
Payment within discount period:
Dr Cash $77,000
Cr Accounts receivable $77,000
Explanation:
Upon sales on July 15 ,2021 the total sales value of $77,000 ($55*1400) is credited sales account and debited to account receivables.
Collection of cash on July 23 ,2021 implies that the payment was collected within the discount period,hence the amount received is selling price less 2% discount, and as a result cash collected is $75460 ($77000*98%)
When payment is made on August 15, no discount is given has discount period has lapsed.
