Question

Harwell Company manufactures automobile tires. On July 15, 2021, the company sold 2,400 tires to the Nixon Car Company for $50 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, 2021. 2. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and payment on August 15, 2021.

Answer 1

1.

Date	General Journal	Debit	Credit
15-07-2021	Accounts Receivable	120,000.00
	Sales Revenue		120,000.00
23-07-2021	Cash	117,600.00
	Sales Discounts	2,400.00
	Accounts Receivable		120,000.00

2.

Date	General Journal	Debit	Credit
15-07-2021	Accounts Receivable	120,000.00
	Sales Revenue		120,000.00
15-08-2021	Cash	120,000.00
	Accounts Receivable		120,000.00