Explanation:
The journal entries are shown below:
a. On December 3
Account receivable A/c Dr $570,000
To Sales $570,000
(Being the goods are sold on credit)
Cost of goods sold A/c Dr $350,000
To Merchandise Inventory A/c $350,000
(Being goods are sold at cost)
On December 8
Sales return and allowance A/c Dr $20,000
To Accounts receivable $20,000
(Being sales return is recorded)
On December 13
Cash A/c Dr $539,000
Sales Discount A/c Dr $11,000
To Accounts receivable $550,000
(Being cash received recorded)
The computation of the account receivable
= Credit sales - returned goods
= $570,000 - $20,000
= $550,000
And, the discount would be
= Accounts receivable × percentage given
= $550,000 × 2%
= $11,000
The remaining amount would be credited to the cash account.
b. On January 2
Cash $550,000
To Account receivable $550,000
(Being the receipt of payment is recorded)
