Question

Sampson Co. sold merchandise to Batson Co. on account, $36,900, terms 2/15, net 45. The cost of the merchandise sold is $27,675. Batson Co. paid the invoice within the discount period. Assume both Sampson and Batson use a perpetual inventory system. Prepare the entries that Sampson Co. would record for the information above.

Answer 1

Answer:

Explanation:

The journal entries are shown below:

Accounts receivable A/c Dr $36,900

        To Sales A/c $36,900

(Being merchandise is sold on credit basis)

Cost of goods sold A/c Dr $27,675

                 To Merchandise inventory A/c $27,675

(Being merchandise is sold at cost is recorded)

Cash A/c Dr                   $36,162

Sales Discount A/c Dr $738

     To  Accounts receivable    $36,900

(Being cash received recorded)

The computation of the discount would be

= Accounts receivable × percentage given

= $36,900 × 2%

= $738

The remaining amount would be credited to the cash account.