Question

On June 3, Culver Company sold to Chester Company merchandise having a sale price of $5,600 with terms of 2/10, n/60, f.o.b. shipping point. An invoice totaling $93, terms n/30, was received by Chester on June 8 from John Booth Transport Service for the freight cost. On June 12, the company received a check for the balance due from Chester Company. (a) Prepare journal entries on the Culver Company books to record all the events noted above under each of the following bases. (1) Sales and receivables are entered at gross selling price. (2) Sales and receivables are entered at net of cash discounts. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Answer 1

1.Sales and receivables are entered at gross selling price

Date	Account Titles and Explanation	Debit	Credit
June 3	Accounts Receivable—Chester	5600
	Sales Revenue		5600
June 12	Cash	5488
	Sales Discounts [5600*2%]	112
	Accounts Receivable—Chester		5600

2. Sales and receivables are entered at net of cash discounts

Date	Account Titles and Explanation	Debit	Credit
June 3	Accounts Receivable—Chester [5600*98%]	5488
	Sales Revenue		5488
June 12	Cash	5488
	Accounts Receivable—Chester		5488