Question

On April 1, Moloney Meat Distributors sold merchandise on account to Fronke’s Franks for $2,100 on Invoice 1001, terms 1/10, n/30. Payment was received in full from Fronke’s Franks, less discount, on April 10

Answer 1

Answer:

See explanation section.

Explanation:

Moloney Meat Distributors

Journal Entries

Particulars Debit($) Credit($)

April - 1 Accounts Receivable 2,100

Sales Revenue 2,100

(Assuming it is periodical, we need not show cost of goods sold journal. Since the payment is within the discount period, there will be a separate journal entry is needed. However, a compound journal entry can illustrate the answer.)

April - 10 Sales Discount 21

Accounts Receivables 21

(1/10, n/30 means the buyer will get a 1% discount, if he pays within 10 days, however, the buyer has to pay within 30 days.

As the payment is made within the discount period, the buyer receives the discount).

April - 10 Cash 2,079

Accounts Receivables 2,079

(as the buyer gets the rebate, he will pay (2100 - 21=2,079 during the date of payment).