Question

Harwell Company manufactures automobile tires. On July 15, 2018, the company sold 1,600 tires to the...

Harwell Company manufactures automobile tires. On July 15, 2018, the company sold 1,600 tires to the Nixon Car Company for $40 each. The terms of the sale were 2/10, n/30. Harwell uses the net method of accounting for cash discounts.

Required:
1.
Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and payment on July 23, 2018.
2. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and payment on August 15, 2018.

Homework Answers

Answer #1

1. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and payment on July 23, 2018.

Date accounts & explanation debit credit
July 15 Account receivable (1600*40*98%) 62720
Sales revenue 62720
(To record sales)
July 23 Cash 62720
Account receivable 62720
(To record amount received)

1. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and payment on August 15, 2018..

Date accounts & explanation debit credit
July 15 Account receivable (1600*40*98%) 62720
Sales revenue 62720
(To record sales)
Aug 15 Cash 64000
Sales discount forfeited 1280
Account receivable 62720
(To record amount received)
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