Question

Transactions for Buyer and Seller Ellis Co. sold merchandise to Angelleti Co. on account, $9,850, terms...

Transactions for Buyer and Seller

Ellis Co. sold merchandise to Angelleti Co. on account, $9,850, terms 2/15, n/30. The cost of merchandise sold is $5,910. Assume all discounts are taken.

Journalize Ellis Co.'s entries for (a) the sale on account and (b) the collection of the amount due.

(a)
(b)

Journalize Angelleti Co.'s entries for (a) the purchase of merchandise on account and (b) the payment of the amount due.

(a)
(b)
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Answer #1

Ellis Co.'s entries

Account Titles and Explanation Debit Credit
a. Account receivable $9,850
Sales Revenue $9,850
Inventory $9,850
Cost of goods sold $9,850
(For sales of goods on account)
b. Cash $9,653
sales Discount ( 2% of $9,850) $197
Account receivable $9,850
(For receipt of payment from customer)

Angelleti Co.'s entries

Account Titles and Explanation Debit Credit
a. Inventory $9,850
Accounts Payable $9,850
( For purchase of goods on account)
b. Accounts Payable $9,850
Inventory( 2% of $9,850) $197
Bank        ( $9,850- $197) $9,653
(For Payment to supplier)
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