On June 3, Arnold Company sold to Chester Company merchandise having a sale pric
ID: 2427188 • Letter: O
Question
On June 3, Arnold Company sold to Chester Company merchandise having a sale price of $4,500 with terms of 4/10, n/60, f.o.b. shipping point. An invoice totaling $93, 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.
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
On June 3, Arnold Company sold to Chester Company merchandise having a sale price of $4,500 with terms of 4/10, n/60, f.o.b. shipping point. An invoice totaling $93, 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.
Explanation / Answer
Question Date Accounts Title and explanation Debit $ Credit $ (1)Sales and receivables are entered at gross selling price. June 3 Accounts Receivable 4500 Revenue 4500 June 12 Cash 4227 cash discount 180 John Booth Transport Service 93 Accounts Receivable 4500 (2) Sales and receivables are entered at net of cash discounts. June 3 Accounts Receivable 4320 cash discount 180 Revenue 4500 June 12 Cash 4227 John Booth Transport Service 93 Accounts Receivable 4320 Chester Company did not remit payment until July 29 June 13 Accounts Receivable 180 Cash discount 180 (cash discount reversed)
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