Presented below is information from Lopez Computers Incorporated. July 1 Sold $2

ID: 2504195 • Letter: P

Question

Presented below is information from Lopez Computers Incorporated.

July 1 Sold $27,600 of computers to Smallwood Company with terms 4/15, n/60. Lopez uses the gross method to record cash discounts. 10 Lopez received payment from Smallwood for the full amount owed from the July transactions. 17 Sold $246,100 in computers and peripherals to The Clark Store with terms of 3/10, n/30. 30 The Clark Store paid Lopez for its purchase of July 17.

Date Account Titles and Explanation Debit Credit July 1 July 10 July 17 July 30

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Explanation / Answer

Journal Enteries:-

JULY-1:-

DEBIT ACCOUNTS RECIEVABLE = 27600

CREDIT SALES = 27600

JULY-10:-

DEBIT DISCOUNT ALLOWED [27600*4%] = 1104

DEBIT CASH [27600-1104] = 26496

CREDIT ACCOUNTS RECIEVABLE = 27600

NOTE:- SINCE THE PAYMENT IS MADE WITHIN 15 DAYS Smallwood Company IS ENTITLED TO A CASH DISCOUNT OF 4%

JULY-17:-

DEBIT ACCOUNTS RECIEVABLE = 246100

CREDIT SALES = 246100

JULY-30:-

DEBIT CASH = 246100

CREDIT ACCOUNTS RECIEVABLE = 246100

NOTE:- SINCE PAYMENT IS NOT WITHIN 10 DAYS NO CASH DISCOUNT WILL BE GIVEN TO Clark Store