Question

Harwell Company manufactures automobile tires. On July 15, 2021, the company sold 1,200 tires to the Nixon Car Company for $45 each. The terms of the sale were 2/20, n/30. Harwell uses the gross method of accounting for cash discounts.

Required:

1. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and collection on July 23, 2021.
2. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and collection on August 15, 2021.
  

Answer 1

Journal Entries:

1.

Date	General Journal	Debit	Credit
July 15	Account Receivable (1200*$45)	$54000
	Sales Revenue		$54000
	(To record Sales made)
Juy 23	Cash	$52920
	Sales Discount (1200*$45*3%)	$1080
	Account Receivable		$54000
	(To record cash receipt)

2 .

Date	General Journal	Debit	Credit
July 15	Account Receivable	$54000
	Sales Revenue		$54000
	(To record Sales made)
Aug 15	Cash	$54000
	Account Receivable		$54000
	(To record cash receipt)