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Q1) On June 3, Arnold Company sold to Chester Company merchandise having sale price of $3,000 with terms of 2/10, n /60, f.o.b. shipping point. Invoice totaling $90, terms n/30, was got by Chester on June 8 from John Booth Transport Service for freight cost. On June 12, company received check for balance due from Chester Company.

a) Create journal entries on Arnold Company books to record all events noted above under each of given bases.

1. Sales and receivables are entered at gross selling price.
2. Sales and receivables are entered at net of cash discounts.

b) Create journal entry under basis 2, suppose that Chester Company didn't remit payment until July 29.

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  • Category:- Accounting Basics
  • Reference No.:- M920003

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