The following transactions are for Masland Company. 1. On December 3, Masland Co

Question

The following transactions are for Masland Company. 1. On December 3, Masland Company sold $550,000 of merchandise to Parker Co., term 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 Comapny recieved the balance due from Parker Co. a) Prepare the journal entries to record these transactions on the books of Lasland Comapny. 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 Decemner 13. Prepare the journal entry to record the receipt of payment of January 2.

Explanation / Answer

a. Dec. 3 Debit: AR 550,000 Credit: Sales550,000 Debit: cost of goods sold 330,000 credit: merchandise inventory 330,000 Dec. 8 Debit: Sales returns and allowances 25,000 Credit: AR 25,000 Dec. 13 Debit: Cash 519,750 Debit: Sales discounts 5,250 Credit: AR 525,00 b. Jan 2 Debit: Cash 525,000 Credit: AR 525,000

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