Baker Co. uses a perpetual inventory and the net method to record sales. Prepare

Question

Baker Co. uses a perpetual inventory and the net method to record sales. Prepare the required journal entries for the following transactions. Omit explanations.

November        15        Sold merchandise for $750 terms 4/15, n/60. The merchandise has a cost of $600.

December        5          Collected the cash from the sale on November 15.

                        20        Sold merchandise for $900 terms 5/10, n/30. The merchandise has a cost of $700.

                        27        Collected the cash from the sale of December 20.

Explanation / Answer

Date Account Title and Explanation Debit Credit 15-Nov Account Receivable $720 Sales $720 (To record sales on net basis) *$750 x 96% = $720 15-Nov Cost of Goods Sold $600 Inventory $600 (To record the cost of goods sold) 5-Dec Cash $750 Account Receivable $720 Sales Discount Forfeited $30 (To record the cash received) 20-Dec Account Receivable $855 Sales $855 (To record sales on net basis) *$900 x 95% = $855 20-Dec Cost of Goods Sold $700 Inventory $700 (To record the cost of goods sold) 27-Dec Cash $855 Account Receivable $855 (To record the cash received)

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