Question

uses the net method to record invoices. The customer pays the balance due on November 30 Complete the journal entry to record the receipt of cash from the customer by selecting the account names from the drop-down menus and the amounts in the Debit and Credit columns. View transaction list Journal entry worksheet 1 A company sells merchandise on November 2 at a $4,000 invoice price with terms of 2/10, n/30. The goods cost $2,000. The company uses the net method to record invoices. The customer pays the balance due on November 30. Note: Enter debits before credits Date General Journal Debit Credit 11/30 Record entry Clear entry View general journal

Answer 1

Answer:

• At the time of payment in cash.    

Cash   $4.000  Debit  

Accounts Receivable  $4.000  Credit  

Explanation:

In the net method for record invoices the company records the invoices at their net value, which is the total value of the invoice minus the corresponding discounts.    

At the time of the sale, the company recorded the discounted invoice amount, this method assumes that each client will pay in time to receive the discounts offered.    

• The first entry to the accounting system is:    

Accounts Receivable  $3,920  Debit  

Sales Revenue        $3,920  Credit  

Cost of Goods    

Cost of Goods Sold  $2,000  Debit  

Inventory                $2,000  Credit  

 

The payment condition is 2/10, n/30, which means that if the payment is made before the next 10 days of the invoice date the discount will apply.    

• As the invoice was issued on November 2 and the payment was made on November 30 the entry is as follow:    

Accounts Receivable      $80  Debit  

Sales Discount Forfeited  $80  Credit  

At the time of payment in cash.    

Cash                               $4,000  Debit  

Accounts Receivable     $4,000  Credit