Question 1 Record the following transactions on the books of Vaughn Manufacturin

Question

Question 1 Record the following transactions on the books of Vaughn Manufacturing (Omit cost of goods sold entries.) (Credit account titles are automatically indented when amount is entered. Do not indent manually.) (a) On July 1, Vaughn Manufacturing sold merchandise on account to Stacey Inc. for $22,600, terms 3/10, n/30. (b) On July 8, Stacey Inc. returned merchandise worth $2,500 to Vaughn Manufacturing. (c) On July 11, Stacey Inc. paid for the merchandise. No. Date Account Titles and Explanation Debit Credit (c) July 11 SHOW LIST OF ACCOUNTS LINK TO TEXT INTERACTIVE TUTORIAL

Explanation / Answer

Vaughn manufacturing sold the goods on credit basis with terms that if Stacey Inc. pays the whole amount is cash within 10 days then he will get discount of 2% otherwise payment can be done within 30 days from the date of sale.

The journal entries in books of Vaughn manufacturing is as follows:

Working note:

* Since Vaughn manufacturing sold the goods on credit basis and Stacey Inc, has paid the amount in cash within 10 days of sale. Therefore, they are eligible for cash discount which is calculated as follows:

Balance accounts receivables after return of goods = $20,100 ($22,600 - $2,500)

Discount on net sales = 10% * $20,100

Discount on net sales = $2,010

Therefore, cash paid by Stacey inc. is $18,090 ($20,100 - $2,010).

No. Date Account Titles and explanation Debit Credit a) July 1 Accounts receivables-Stacey Inc. $22,600 Sales $22,600 b) July 8 Sales return and allowances $2,500 Accounts receivables-Stacey Inc. $2,500 c) July 11 Cash* $18,090 Sales discount $2,010   Accounts receivables-Stacey Inc. $20,100

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.