Question

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

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)