Question

Telfer Co. uses the gross method to record sales made on credit. On July 1, 2014, Telfer and its customer agreed to the details for sales of $75,000 with terms 2/10 n/30. On July 2, 2014, Telfer shipped the goods to its customers. On July 7, 2014, the customer received the goods from Telfer. On July 9, 2014, Telfer received $41,500 of the A/R from the July 1 sale. On July 25, 2014, Telfer received the balance from the customer. Prepare the required journal entries for Telfer Co. Be sure to include alternative journal entries given the potential shipping scenarios.

Answer 1

Date	Account Titles and Explanation	Debit	Credit
2-Jul-14	Accounts Receivable	$75,000
	Sales Revenue		$75,000
	To record credit sales
9-Jul-14	Cash	$41,500
	Discount Allowed (42347*2%)	$847
	Accounts Receivable (41500/98%)		$42,347
	To record cash received for credit sales
25-Jul-14	Cash	$32,653
	Accounts Receivable (75000-42347)		$32,653
	To record cash received for credit sales