Exercise 7-6 Cash discounts; the gross method [L07-3] Harwell Company manufactur

Question

Exercise 7-6 Cash discounts; the gross method [L07-3] Harwell Company manufactures automobile tires. On July 15, 2018, the company sold 1,900 tires to the Nixon Car Company for $35 each. The terms of the sale were 2/20, n/30. Harwell uses the gross method of accounting for cash discounts Required: 1. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and collection on July 23, 2018. 2. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and collection on August 15, 2018. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and collection on July 23, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 2 Record the sale of 1,900 tires for $35 each with a term of 2/20, n/30 under

Explanation / Answer

A. 1. Record sale of 1900 tires for $ 35 each with a term of 2/20,n/30 under the gross method of accounting for cash discounts July 15,2018 Accounts receivables 66500 Sales 66500 2. Record the cash collection on July 23 ie. Within the discount period July 23,2018 Cash(66500-1330) 65170 Sales discounts 66500*2% 1330 Accounts receivables 66500 B. 1. Record sale of 1900 tires for $ 35 each with a term of 2/20,n/30 under the gross method of accounting for cash discounts July 15,2018 Accounts receivables 66500 Sales 66500 2. Record the cash collection on Aug. 15 ie. After the discount period July 23,2018 Cash 66500 Accounts receivables 66500

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