Question

Sampson Co. sold merchandise to Batson Co. on account, $28,400, terms 2/15, net 45 on December 26. The cost of the goods sold is $21,300. The Batson Co. paid the invoice on December 31, within the discount period. Assume both Sampson and Batson use a perpetual inventory system.

Required:

Prepare the entries that both Sampson and Batson Companies would record for the above. Refer to the Chart of Accounts for exact wording of account titles. If no entry is required, simply skip to the next transaction.

Answer 1

Journal entries : In the books of Sampson Company

Date	account and explanation	Debit	Credit
Dec 26	Account receivable	28400
	Sales revenue		28400
	(To record sales)
	Cost of goods sold	21300
	Merchandise inventory		21300
	(To record cost of goods sold)
Dec 31	Cash (28400*98%)	27832
	Sales discount	568
	Account receivable		28400
	(To record collection)

Journal entries : Batson Companies

Date	account and explanation	Debit	Credit
Dec 26	Merchandise inventory	28400
	Account payable		28400
	(To record purchase)
Dec 31	Account payable	28400
	Cash		27832
	Merchandise inventory		568
	(To record amount paid)