Exercise 7-5 (Part Level Submission) On June 3, Arnold Company sold to Chester C
ID: 2486128 • Letter: E
Question
Exercise 7-5 (Part Level Submission)
On June 3, Arnold Company sold to Chester Company merchandise having a sale price of $5,100 with terms of 3/10, n/60, f.o.b. shipping point. An invoice totaling $96, 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.
(a)
No.
Date
Account Titles and Explanation
Debit
Credit
June 3
June 12
June 3
June 12
Exercise 7-5 (Part Level Submission)
On June 3, Arnold Company sold to Chester Company merchandise having a sale price of $5,100 with terms of 3/10, n/60, f.o.b. shipping point. An invoice totaling $96, 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
Note :- The discount amount = $5,100 * 3% = $$153
There will be NO journal entry for freight in the books of Arnold Company as it is f.o.b. shipping point and the buyer needs to pay for it
No. Date Account Titles and Explanation Debit Credit (1) June 3 Accounts receivable 5,100 Sales 5,100 (Being merchandise sold to Chester Company recorded at gross sales value) June 12 Cash 4,947 Discount on Sales 153 Accounts Receivable 5,100 (Being cash collected and discount offered) 2 June 3 Accounts Receivable 4947 Sales 4,947 (Being merchandise sold recorded at net sales value) June 12 Cash 4,947 Accounts Receivable 4,947 (Being cash payment received on account of merchandise sold)Related Questions
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