Answer:
Date: July 1
Debit: Cullumber Company $126,000
Credit: Sales Revenue $126,000
To record sales on account, in terms of Gross method.
Date: July 12
Debit: Bramble Corp. $82,000
Credit: Sales Revenue $82,000
To record sales on account to Bramble Corp.
Date: July 18
Debit: Cash $77,900
Debit: Discount Allowed $4,100
Credit: Bramble Corp. $82,000
To record cash received from Bramble Corp. within 10 days so allowed discount of 5%.
Date: July 20
Debit: Discount Allowed $2,700
Credit: Cullumber Company $2,700
To record discount allowed to Cullumber Company
Date: July 29
Debit: Cash $123,300
Credit: Cullumber Company $123,300
To record Cash received from Cullumber Company
Explanation:
July 1: 4/15, n/30 means that if the payment is made within 15 days then a discount of 4% will be given on sales amount otherwise whole payment needs to be made within 30 days. The Gross Method means that whatever amount is written on invoice will be journalized. So the allowance of $1,500 will not be recorded in this journal entry as it is merely estimation and not really honored by vendor yet.
July 12: 5/10, n/60 means that if the payment is made within 10 days of purchase the buyer can avail 10% discount otherwise full payment in 60 days.
July 18: Since the payment is made within 10 days of purchase. Hence the 10% of discount would be given to Bramble Corp.
Discount Allowed = $82,000 x 5% = $4,100
July 20: Credit of $2,700 means that Cullumber will pay $2,700 less of the amount it owes to Marin.
July 29: Cullumber could have availed the discount if made the payment within 15 days as per terms but as made within 30 days so have to make the full payment. Except that of Discount allowed in terms of compensation due to wrong color provided by Marin of $2,700.
July 31: Since the Marin expectations have not been realized yet so no entry required at this time.
