Presented below are two independent situations. a. On January 6, Brumbaugh Co. sells merchandise...
Question:
Presented below are two independent situations.
a. On January 6, Brumbaugh Co. sells merchandise on account to Pryor Inc. for $7,000, terms 2/10, n/30. On January 16. Pryor Inc. pays the amount due.
Prepare the entries on Brumbaugh's books to record the sale and related collection.
b. On January 10, Andrew Farley uses his Paltrow Co. credit card to purchase merchandise from Paltrow Co. for $9,000. On February 10, Farley is billed for the amount due of $9,000. On February 12, Farley pays $5,000 on the balance due. On March 10, Farley is billed for the amount due, including interest at 1 percentage per month on the unpaid balance as of February 12. Prepare the entries on Paltrow Co.'s books related to the transactions that occurred on January 10, February 12, and March 10.
Sales Revenue:
Sales of a company can be made through cash or on account, but whatever the mode of payment is, as long as the service and the goods have already been delivered, the transaction will be considered as sales and will be reported accordingly in the income statement. Trade sales are the company's main source of revenue, that is why they must ensure that those sales made on account will be collected within the period they've provided.
Answer and Explanation: 1
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View this answer| Date | Account titles | Debit | Credit |
|---|---|---|---|
| Jan. 6 | Accounts receivable | 7,000 | |
| Sales | 7,000 | ||
| Jan. 16 | Cash | 6,860 | |
| Sales discount... |
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