Question

Tracy Company, a manufacturer of air conditioners, sold 140 units to Thomas Company on November 17, 2021. The units have a list price of $500 each, but Thomas was given a 20% trade discount. The terms of the sale were 3/10, n/30. Required: 1. Please help me make the journal entries to record the sale on November 17 (ignore cost of goods) and collection on November 26, 2021, assuming that the gross method of accounting for cash discounts is used. 2. Please help me make the journal entries to record the sale on November 17 (ignore cost of goods) and collection on December 15, 2021, assuming that the gross method of accounting for cash discounts is used. Thank you!

Answer 1

• Journal entries for #1

Date	Accounts title	Debit	Credit
17-Nov	Accounts receivables (140 units x $ 500) - 20% trade discount	$56,000
	Sales revenue		$56,000
	(to record sales)
26-Nov	Cash ($56000 - 3%)	$54,320
	Sales discounts ($ 56000 x 3%)	$1,680
	Accounts receivables		$56,000
	(to record collection within discount period)

• Journal entries for #2

Date	Accounts title	Debit	Credit
17-Nov	Accounts receivables (140 units x $ 500) - 20% trade discount	$56,000
	Sales revenue		$56,000
	(to record sales)
15-Dec	Cash	$56,000
	Accounts receivables		$56,000
	(to record collection after discount period)