Question

On June 3, Culver Company sold to Chester Company merchandise having a sale price of $5,600...

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.)

Homework Answers

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
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