Question

Metlock Company sells goods to Danone Inc. by accepting a note receivable on January 2, 2017....

Metlock Company sells goods to Danone Inc. by accepting a note receivable on January 2, 2017. The goods have a sales price of $649,600 (cost of $550,000). The terms are net 30. If Danone pays within 5 days, however, it receives a cash discount of $9,600. Past history indicates that the cash discount will be taken. On January 28, 2017, Danone makes payment to Metlock for the full sales price.

Date Account Titles and Explanation Debit Credit
a
b
c

Prepare the journal entry(ies) to record the sale and related cost of goods sold for Metlock Company on January 2, 2017, and the payment on January 28, 2017. Assume that Metlock Company records the January 2, 2017, transaction using the gross method. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Date Account TItles and Explanation Debit Credit
a
b
c

Homework Answers

Answer #1

Journal entry : Net method

Date Account title and explanation debit credit
a Notes receivable 640000
Sales revenue 640000
(To record sales)
b Cost of goods sold 550000
Inventory 550000
(To record cost of goods sold)
c Cash 649600
Notes receivable 640000
Sales discount lost 9600
(To record payment received)

Journal entry : Gross method

Date Account title and explanation debit credit
a Notes receivable 649600
Sales revenue 649600
(To record sales)
b Cost of goods sold 550000
Inventory 550000
(To record cost of goods sold)
c Cash 649600
Notes receivable 649600
(To record payment received)
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