On June 3, Arnold Company sold to Chester Company merchandise having a sale pric
ID: 2416418 • Letter: O
Question
On June 3, Arnold Company sold to Chester Company merchandise having a sale price of $2,100 with terms of 3/10, n/60, f.o.b. shipping point. An invoice totaling $94, 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 Arnold Company books to record all the events noted above under each of the following bases.
(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 3
June 12
June 3
June 12
Prepare the journal entry under basis 2, assuming that Chester Company did not remit payment until July 29. (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.)
Date
Account Titles and Explanation
Debit
Credit
(1) Sales and receivables are entered at gross selling price. (2) Sales and receivables are entered at net of cash discounts.Explanation / Answer
No Date Account Title Dr Cr Gross Method 1 3-Jun Accounts receivable $2,100 Sales $2,100 12-Jun Cash 2037 Sales Discount 63 Accounts Receivable 2100 If payment remitted on July 29 entry for basis 1 Cash $2,100 Accounts Receivable $2,100 2 Net Method 3-Jun Accounts Receivable $2,037 Sales $2,037 12-Jun Cash $2,037 Accounts Receivable $2,037 If payment remitted on July 29 entry for basis 2 Cash $2,100 Accounts Receivable $2,037 Sales Discount Forfetied $63 As its FOB shipping so the cost is borne or is expense of buyer so no entry in the Arnold Books Gross method: sales is recorded at full price Net Methos= sales-Potentioal Cash Discount= $2100-63=$2037
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