Chapter 5: Q30E (page 304)

Journalize the following sales transactions for Straight Shot Archery using the periodic inventory system. Explanations are not required. The company estimates sales returns and allowances at the end of each month.
Aug. 1 Sold $6,500 of equipment on the account; credit terms are 1/10, n/30.
8 Straight Shot received payment from the customer on the amount due from August 1, less the discount.
15 Sold $3,100 of equipment on the account; credit terms are n/45, FOB destination.
15 Straight Shot paid $90 on freight out.
20 Straight Shot negotiated a $500 allowance on the goods sold on August 15.
24 Received payment from the customer on the amount due from August 15, less the allowance.

Short Answer

Expert verified

The total of debits and credits is$19,290.

Step by step solution

Meaning of Discount

In accounting, the term discount refers to the reduction in the price of a product or service provided by the seller with a motive to receive immediate payments from the buyers. Discount is considered an expense for the seller and other revenue for the buyer.

Preparation of journal entries

Date	Accounts and Explanation	Debit ($)	Credit ($)
Aug 1	Accounts receivable	6,500
	Sales		6,500
Aug 8	Cash	6,435
	Sales discount (6500*1%)	65
	Accounts receivable		6,500
Aug 15	Accounts receivable	3,100
	Sales		3,100
Aug 15	Freight-out	90
	Cash		90
Aug 20	Sales returns and allowances	500
	Accounts receivables		500
Aug 24	Cash	2,600
	Accounts receivable (3100-500)		2,600

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Short Answer

Step by step solution

Meaning of Discount

Preparation of journal entries

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