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PROBLEM 2 a) On February 14, 2021, Prime Company sold 50 air-conditioning units to L&P...

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Accounting

PROBLEM 2

a) On February 14, 2021, Prime Company sold 50 air-conditioning units to L&P Heating and Cooling. The units list for $700 each, but L&P was granted a 30% trade discount. All of Prime's sales are subject to terms 2/10, n/30. Prime uses the GROSS method of accounting for sales discounts.

Required: Show computations.

1. Prepare the journal entry to record the sale.

2. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on February 22, 2021.

3. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on March 10, 2021.

b) On June 14, 2021, Rumsfeld Company sold 100 air-conditioning units to Powell Heating and Cooling. The units list for $600 each, but Powell was granted a 25% trade discount. All of Rumsfeld's sales are subject to terms 2/10, n/30. Rumsfeld uses the NET method of accounting for sales discounts.

Required: Show computations.

1. Prepare the journal entry to record the sale.

2. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on June 22, 2021.

3. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on July 10, 2021.

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