Question

On March 1, Sather Co. sold merchandise to Boone Co. on account, $33,800, terms 2/15, n/30. The cost of the merchandise sold is $18,000. The merchandise was paid for on March 14. Assume all discounts are taken.

Required:

Journalize the entries for Sather Co. and Boone Co. (on seperate journals) for the sale, purchase, and payment of amount due. Refer to the appropriate company’s Chart of Accounts for exact wording of account titles.

CHART OF ACCOUNTS Sather Co.General Ledger

	ASSETS
110	Cash
121	Accounts Receivable-Boone Co.
125	Notes Receivable
130	Merchandise Inventory
140	Office Supplies
141	Store Supplies
142	Prepaid Insurance
180	Land
192	Store Equipment
193	Accumulated Depreciation-Store Equipment
194	Office Equipment
195	Accumulated Depreciation-Office Equipment

	LIABILITIES
210	Accounts Payable
218	Sales Tax Payable
219	Customers Refunds Payable
220	Unearned Rent
221	Notes Payable

	EQUITY
310	Owner, Capital
311	Owner, Drawing
312	Income Summary

	REVENUE
410	Sales
610	Rent Revenue

	EXPENSES
501	Cost of Merchandise Sold
521	Delivery Expense
522	Advertising Expense
524	Depreciation Expense-Store Equipment
525	Depreciation Expense-Office Equipment
531	Rent Expense
533	Insurance Expense
534	Store Supplies Expense
535	Office Supplies Expense
536	Credit Card Expense
539	Miscellaneous Expense
710	Interest Expense

CHART OF ACCOUNTS

Boone Co.

General Ledger

	ASSETS
110	Cash
120	Accounts Receivable
125	Notes Receivable
130	Merchandise Inventory
140	Office Supplies
141	Store Supplies
142	Prepaid Insurance
180	Land
192	Store Equipment
193	Accumulated Depreciation-Store Equipment
194	Office Equipment
195	Accumulated Depreciation-Office Equipment

	LIABILITIES
211	Accounts Payable-Sather Co.
218	Sales Tax Payable
219	Customers Refunds Payable
220	Unearned Rent
221	Notes Payable

	EQUITY
310	Owner, Capital
311	Owner, Drawing
312	Income Summary

	REVENUE
410	Sales
610	Rent Revenue

	EXPENSES
501	Cost of Merchandise Sold
521	Delivery Expense
522	Advertising Expense
524	Depreciation Expense-Store Equipment
525	Depreciation Expense-Office Equipment
531	Rent Expense
533	Insurance Expense
534	Store Supplies Expense
535	Office Supplies Expense
536	Credit Card Expense
539	Miscellaneous Expense
710	Interest Expense

Answer 1

Note:
I followed the perpetual Inventory system under net method due to no system / method mentioned in the question.

Calculation to find the discount (terms 2/15)
* $33,800 X 2% = $676
$33,800 - $676 = $33,124

Sather Co.

Date	Account Name / Explanation	Account #	Debit	Credit
Mar 1	Account Receivable	120	33,124
	Sales	410		33,124
	(goods sold, terms 2/15, n/30)
Mar 1	Cost of Merchandise sold	501	18,000
	Merchandise Inventory	130		18,000
	(cost of sale)
Mar 14	Cash	110	33,124
	Accounts Receivable			33,124

Boone Co.

Date	Account Name / Explanation	Account #	Debit	Credit
Mar 1	Merchandise Inventory	130	33,124
	Account payable	210		33,124
	(purchased goods, terms 2/15, n/30)
Mar 14	Account payable	210	33,124
	Cash	110		33,124
	(cash paid within a discount period) *( $33,800 X 2% = 676)

* $33,800 - $676(discount) = $33,124 paid