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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

Solutions

Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

Prepare journal entries for the following sales and cash receipts transactions.

  1. (a) Merchandise is sold on account for $300 plus 3% sales tax, with 2/10, n/30 cash discount terms.
  2. (b) Part of the merchandise sold in transaction (a) for $70 plus sales tax is returned for credit.
  3. (c) The balance on account for the merchandise sold in transaction (a) is paid in cash within the discount period.

(a).

To determine

Journalize the sales on account transaction.

Explanation

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

  • Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
  • Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

Prepare journal entry to record the credit sale transaction.

DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
Accounts Receivable309
Sales300
Sales Tax Payable9
(Record credit sale)

Table (1)

Description:

  • Accounts Receivable is an asset account...

(b).

To determine

Journalize the merchandise returned transaction.

(c).

To determine

Journalize the cash collected from the sale on account.

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