st 0140-27 Harwell Company manufactures automobile tires. On July 15, 2018, the company sold 1,000 tires to the Nixon Car Company for $50 each. The terms of the sale were 2/10, 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.

st 0140-27 Harwell Company manufactures automobile tires. On July 15, 2018, the company sold 1,000 tires to the Nixon Car Company for $50 each. The terms of the sale were 2/10, 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.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter6: Merchandising Transactions

Section: Chapter Questions

Problem 6EB: Blue Barns purchased 888 gallons of paint at $19 per gallon from a supplier on June 3. Terms of the...

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Blue Barns sold 136 gallons of paint at $31 per gallon on July 6 to a customer with a cost of $19 per gallon to Blue Barns. Terms of the sale are 2/15, n/45, invoice dated July 6. The customer pays their account in full on July 24. On July 28, the customer discovers 17 gallons are the wrong color and returns the paint for a full cash refund. Blue Barns returns the gallons to their inventory at the original cost per gallon. Record the journal entries to recognize these transactions for Blue Barns.
Review the following transactions, and prepare any necessary journal entries for Sewing Masters Inc. A. On October 3, Sewing Masters Inc. purchases 800 yards of fabric (Fabric Inventory) at $9.00 per yard from a supplier, on credit. Terms of the purchase are 1/5, n/40 from the invoice date of October 3. B. On October 8, Sewing Masters Inc. purchases 300 more yards of fabric from the same supplier at an increased price of $9.25 per yard, on credit. Terms of the purchase are 5/10, n/20 from the invoice date of October 8. C. On October 18, Sewing Masters pays cash for the amount due to the fabric supplier from the October 8 transaction. D. On October 23, Sewing Masters pays cash for the amount due to the fabric supplier from the October 3 transaction.
Air Compressors Inc. purchases compressor parts for its inventory from a supplier. The following transactions take place during the current year: A. On April 5, the company purchases 400 parts for $8.30 per part, on credit. Terms of the purchase are 4/ 10, n/30, invoice dated April 5. B. On May 5, Air Compressors does not pay the amount due and renegotiates with the supplier. The supplier agrees to $400 cash immediately as partial payment on note payable due, converting the debt owed into a short-term note, with a 7% annual interest rate, payable in three months from May 5. C. On August 5, Air Compressors pays its account in full. Record the journal entries to recognize the initial purchase, the conversion plus cash, and the payment.
Blue Barns purchased 888 gallons of paint at $19 per gallon from a supplier on June 3. Terms of the purchase are 2/15, n/45, invoice dated June 3. Blue Barns pays their account in full on June 20. On June 22, Blue Barns discovers 20 gallons are the wrong color and returns the gallons for a full cash refund. Record the journal entries to recognize these transactions for Blue Barns.
Harwell Company manufactures automobile tires. On July 15, 2018, the company sold 1,000 tires to the NixonCar Company for $50 each. The terms of the sale were 2/10, n/30. Harwell uses the gross method of accountingfor 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.
Harwell Company manufactures automobile tires. On July 15, 2021, the company sold 1,000 tires to the Nixon Car Company for $50 each. The terms of the sale were 2/10, n/30. Harwell uses the gross method of accountingfor cash discounts.Required:1. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and collection on July 23, 2021.2. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and collection on August 15, 2021.
Harwell Company manufactures automobile tires. On July 15, 2021, the company sold 1,000 tires to the Nixon Car Company for $50 each. The terms of the sale were 2/10, n/30. Harwell uses the net method of accounting for cash discounts.Required:1. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and payment on July 23, 2021.2. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and payment on August 15, 2021.
On July 15, 2018, the Nixon Car Company purchased 1,000 tires from the Harwell Company for $50 each. Theterms of the sale were 2/10, n/30. Nixon uses a periodic inventory system and the gross method of accounting forpurchase discounts.Required:1. Prepare the journal entries to record the purchase on July 15 and payment on July 23, 2018.2. Prepare the journal entry to record the payment on August 15, 2018.3. If Nixon instead uses a perpetual inventory system, explain any changes to the journal entries created inrequirements 1 and 2.
Kristopher Company sold $40,500 of goods to Evan Company on credit on March 1, 2022. Terms were 3/10, n/30. Required: Prepare the journal entry on Kristopher’s books to record the sale. Prepare the journal entries to record collection, if the customer paid on April 8, 2021. Prepare the journal entry to record collection, if the customer paid on March 8, 2021.
[This is a variation of E 7–6 modified to focus on the net method of accounting for cash discounts.]Harwell Company manufactures automobile tires. On July 15, 2018, the company sold 1,000 tires to the NixonCar Company for $50 each. The terms of the sale were 2/10, n/30. Harwell uses the net method of accounting forcash discounts.Required:1. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and payment on July 23, 2018.2. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and payment on August 15,2018.
On July 15, 2024, the Niche Car Company purchased 2,700 tires from the Treadwell Company for $30 each. The terms of the sale were 3/10. n/30. Niche uses a perpetual inventory system and the net method of accounting for purchase discounts. Required: 1. Prepare the journal entries to record the purchase on July 15 and payment on July 23, 2024. 2. Prepare the journal entry for the payment, assuming instead that it was made on August 15, 2024.
Stockton Company sold goods on account with a sales price of $70,000 on August 17. The terms of the sale were 2/10, n/30. INSTRUCTIONS: Record the sale using the gross method of accounting for cash discounts. Record the sale using the net method of accounting for cash discounts. Assume that the payment is received on August 25. Record receipt of the payment using both the gross method and the net method. Assume that payment is received on September 15. Record receipt of the payment using both the gross method and the net method. Is the account used for the net method an asset, liability, revenue, or expense? Which method makes more theoretical sense—the gross method or the net method? Why? Why don’t more firms use the net method?