The following transactions are for Masland Company.
1. On December 3, Masland Company sold $500,000 of merchandise to Parker Co., terms 1/10, n/30. The cost of the merchandise sold was $330,000.
2. On December 8, Parker Co. was granted an allowance of $25,000 for merchandise purchased on December 3.
3. On December 13, Masland Company received the balance due from Parker Co.
a) Prepare the journal entries to record these transactions on the books of Masland Company. Masland uses a perpetual inventory system.
b) Assume that Masland Company received the balance due from Parker Co. on January 2 of the following year instead of December 13. Prepare the journal entry to record the receipt of payment on January 2.
Cost of goods sold expenses are recorded at the same time as its sales transactions in the perpetual inventory system. The sales settlement discount are recorded if the payment for the credit sales are received within the discount period and sale allowance is recorded when it is granted.
Answer and Explanation: 1
a. Journal entries:
|Dec 3||Accounts Receivable||$500,000|
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fromChapter 6 / Lesson 7
Understand inventory sales and journal entries for cash sales and credit sales. Learn how to keep inventory accounting records and calculate sale amounts.