Question

On March 12, Medical Waste Services provides services on account to Grace Hospital for $9,200, terms 3/10, n/30. Grace pays for those services on March 20. Required: For Medical Waste Services, record the service on account on March 12 and the collection of cash on March 20. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Answer:

The journal entries are as follows:

(i) On March 12,

Accounts receivable A/c Dr. $9,200

               To service revenue A/c       $9,200

(To record the rendered service to Grace hospital)

(ii) On March 20,

Cash A/c Dr. $8,924

Discount allowed A/c Dr. $276

       To Accounts Receivable A/c               $9,200

(To record the cash received within discount period)

Workings:

Discount allowed = 3% of $9,200

                             = $276

Answer 2

Preparation of the journal entries

Mar-12

Dr Accounts receivable $9,200

Cr Service revenue  $9,200

(To record service revenue)

Mar-20

Dr Cash $8,924

(97%×$9,200)

Dr Discount and allowances $276

(3%×$9,200)

Cr Accounts receivable  $9,200

(To record collection from receivables)  

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