Question

Oriole Company sells goods to Danone Inc. by accepting a note receivable on January 2, 2020. The goods have a sales price of $659,900 (cost of $460,000). The terms are net 30. If Danone pays within 5 days, however, it receives a cash discount of $9,900. Past history indicates that the cash discount will be taken. On January 28, 2020, Danone makes payment to Oriole for the full sales price.Instructions(a) Prepare the journal entry(ies) to record the sale and related cost of goods sold forJupiter Company on January 2, 2020, and the payment on January 2, 2020. Assume thatJupiter Company records the January 2, 2017, transaction using the net method.(b) Prepare the journal entry(ies) to record the sale and related cost of goods sold forJupiter Company on January 2, 2020, and the payment on January 2, 2020. Assume thatJupiter Company records the January 2, 2017, transaction using the gross metho

Answer 1

Answer:

Explanation:

The journal entries are shown below:

Using net method:

1. Notes receivable A/c Dr $650,000        ($659,900 - $9,900)

      To Sales revenue A/c $650,000

(Being the sale is recorded)

2. Cost of goods sold A/c Dr  $460,000

        To Inventory A/c $460,000

(Being cost of goods sold is recorded)

3. Cash A/c Dr $659,900

       To Notes receivable  $650,000

       To Discount forfeited $9,900

(Being received payment is recorded)

Using gross method:

1. Notes receivable A/c Dr $650,000        ($659,900 - $9,900)

      To Sales revenue A/c $650,000

(Being the sale is recorded)

2. Cost of goods sold A/c Dr  $460,000

        To Inventory A/c $460,000

(Being cost of goods sold is recorded)

3. Cash A/c Dr $659,900

       To Notes receivable  $659,900

(Being received payment is recorded)