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  3. 1. on june 3, a company sells merchandise with pri

1. On June 3, a company sells merchandise with price of $2,000 (Terms: 2/10, net 60....

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Accounting

1. On June 3, a company sells merchandise with price of $2,000(Terms: 2/10, net 60. Instructions: Prepare all the seller’sjournal entries related to this sale and customer payments for boththe Gross and Net methods under the following three mutuallyexclusive cases.

Case 1: Customer settles entire receivable on June 12

Case 2: Customer settles entire receivable on July 29

Case 3: Customer settles ½ of receivable on June 12 and ½ ofreceivable on July 29

Answer & Explanation Solved by verified expert
4.3 Ratings (784 Votes)

Answer: Journal Entry
(In the books of seller)
Gross Method
Date Account title and explanation Debit Credit
Jun-03 Accounts Receivable $                           2,000
Sales Revenue $                                      2,000
(To record sales revenue)
Case 1:
Jun-12 Cash $                           1,960 (2,000*98%)
Sales Discount $                                 40 (2,000*2%)
Accounts Receivable $                                      2,000
(To record receipt within discount period)
Case 2:
Jun-29 Cash $                           2,000
Accounts receivable $                                      2,000
(To record receipt after discount period)
Case 3:
Jun-12 Cash $                              980 (1000*98%)
Sales Discount $                                 20 (1000*2%)
Accounts Receivable $                                      1,000
(To record receipt within discount period)
Jun-29 Cash $                           1,000
Accounts receivable $                                      1,000
(To record receipt after discount period)
Net Method
Date Account title and explanation Debit Credit
Accounts receivable $                           1,960 (2,000*98%)
Sales Revenue $                                      1,960
(To record sales revenue)
Case 1:
Jun-12 Cash $                           1,960 (2,000*98%)
Accounts receivable $                                      1,960
(To record receipt within discount period)
Case 2:
Jun-29 Accounts receivable $                                 40 (2,000*2%)
Sales Discounts Forfeited $                                           40
Cash $                           2,000
Accounts receivable $                                      2,000
(To record receipt after discount period)
Case 3:
Jun-12 Cash $                              980 (2,000*98%)
Accounts receivable $                                         980
(To record receipt within discount period)
Jun-29 Accounts receivable $                                 20 (2,000*2%)
Sales Discounts Forfeited $                                           20
Cash $                           1,000
Accounts receivable $                                      1,000
(To record receipt after discount period)

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