On June 3, Marigold Company sold to Chester Company merchandise having a sale pr

Question

On June 3, Marigold Company sold to Chester Company merchandise having a sale price of $5,600 with terms of 3/10, n/60, f.ob. shipping point. An invoice totaling $95, terms n/30, was received by Chester on June 8 from John Booth Transport Service for the freight cost. On June 12, the company received a check for the balance due from Chester Company Prepare journal entries on the Marigold Company books to record all the events noted above under each of the following bases. (1) Sales and receivables are entered at gross selling price. (2) Sales and receivables are entered at net of cash discounts. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) No. Date Account Titles and Explanation Debit Credit June 12

Explanation / Answer

Solution:

Journal Entries - Marigold No Date Particulars Debit Credit 1 3-Jun Accounts receivables Dr $5,600.00        To Sales Revenue $5,600.00 (To record sales) 12-Jun Cash Dr ($5,600*97%) $5,432.00 Sales Discount Dr ($5,600*3%) $168.00        To Accounts receivables $5,600.00 (To record collection from receivables) 2 3-Jun Accounts receivables Dr $5,432.00        To Sales Revenue $5,432.00 (To record sales) 12-Jun Cash Dr $5,432.00        To Accounts receivables $5,432.00 (To record collection from receivables)

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