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On March 1, 2019, Sea Side Computers Inc. sold $20,000 of computer equipment to Jase Company...

On March 1, 2019, Sea Side Computers Inc. sold $20,000 of computer equipment to Jase Company with term of 2/15, n/45. Sea Side uses the gross method to record cash discounts. Sea Side estimates returns & allowances of $1,200 will be honored on these sales. On March 11, 2019, Sea Side received payment from Jase for the amount owed. What are the necessary journal entries for the transactions above?

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Answer #1

Journal Entries:

Date Account Titles and Explanations Debit Credit
Mar. 1, 2019 Accounts Receivable - Jase Company $20,000
   Sales Revenue $20,000
(To record the sale of computers on account)
Mar. 11, 2019 Cash ($20,000 - $400) $19,600
Discount Allowed ($20,000*2/100) $400
   Accounts Receivable - Jase Company $20,000
(To record the collection of sale amount)
The amount of $1,200 as returns and allowances is just an estimate but there is no actual returns or allowances, hence, it is not included in the journal entries.
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