   Chapter 6, Problem 6.5APE

Chapter
Section
Textbook Problem

Transactions for buyer and sellerSather Co. sold merchandise to Boone Co. on account, $31,800, terms 2/15, n/30. The cost of the merchandise sold is$19,000. Journalize the entries for Sather Co. and Boone Co. for the sale, purchase, and payment of amount due. Assume all discounts are taken.

To determine

Purchases is an activity of acquiring the merchandise inventory of a business.

Sales is an activity of selling the merchandise inventory of a business.

To Record: The sales transactions in the books of Company S.

Explanation

Record the journal entry for the sale of inventory on account.

 Date Accounts and Explanation Debit ($) Credit ($) Accounts Receivable 31,164 (1) To Sales 31,164 (To record the sale of inventory on account after discount)

Table (1)

Working Note:

Calculate the amount of accounts receivable.

Sales = $31,800 Discount Percentage = 2% Amount of accounts receivable} = SalesDiscount=Sales(Sales×2%)=$31,800 – ($31,800×2%)=$31,800$636=$31,164 (1)

Explanation

• Accounts Receivable is an asset and it is increased by $31,164. Therefore, debit account receivable with$31,164.
• Sales is revenue and it increases the value of equity by $31,164. Therefore, credit sales with$31,164.

Record the journal entry for cost of goods sold.

 Date Accounts and Explanation Debit ($) Credit ($) Cost of Merchandise Sold 19,000 Merchandise Inventory 19,000 (To record the cost of merchandise sold)

Table (2)

Explanation

• Cost of merchandise sold is an expense account and it decreases the value of equity by $19,000. Therefore, debit cost of merchandise sold account with$19,000.
• Merchandise Inventory is an asset and it is decreased by $19,000. Therefore, credit inventory account with$19,000.

Record the journal entry for the balance amount received.

 Date Account Title and Explanation Post Ref. Debit ($) Credit ($) Cash 31,164 Accounts Receivable 31,164 (To record cash received less discount)

Table (3)

Explanation:

• Cash is an asset and it is increased by \$31,164

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started 