Question

On June 3, Pina Company sold to Chester Company merchandise having a sale price of $4,600 with terms of 2/10, 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.

Prepare journal entries on the Pina 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
(1)

June 3
June 12
June 12
(2)

June 3
June 12

June 3
June 12

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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
July 29

Answer 1

1
3-Jun	Accounts Receivable-Chester	4600
	Sales		4600
12-Jun	Cash	4508
	Sales Discounts	92		=4600*2%
	Accounts Receivable-Chester		4600
2
3-Jun	Accounts Receivable-Chester	4508
	Sales		4508
12-Jun	Cash	4508
	Accounts Receivable-Chester		4508
3
29-Jul	Cash	4600
	Accounts Receivable-Chester		4508
	Sales Discount Forfeited		92