David Company uses the gross method to record sales made on credit. On June 10, 2017, it sold...

Question:

David Company uses the gross method to record sales made on credit. On June 10, 2017, it sold goods worth $250,000 with terms 2/10, n/30 to Charles Inc. On June 19, 2017, David received payment for 1/2 of the amount due from Charles Inc. David's fiscal year end is on June 30, 2017.

Required:

Prepare the journal entries for the transaction.

What amount will be reported in the financial statements for the accounts receivable due from Charles Inc.?

Account Receivables

Account Receivables are the current assets for the business. Those customer who purchase goods in credit and promise to pay in future they are the account receivables. During sale they are recorded with a debit balance. And when cash is paid they are credited debiting the cash.

Answer and Explanation:


Journal Entries

Date Account Titles Debit Credit
10 June 2017 Account Receivable $250000
Revenue $250000
19 June 2017 Cash (($250000 * 1/2) - ($250000 * 1/2 * 2%)) $122500
Discount Allowed $2500
Account Receivable $125000


Value of Account Receivable will be $125000 as the discount period is expired.


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Accounts Receivable Journal Entries

from Financial Accounting: Homework Help Resource

Chapter 3 / Lesson 20
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