Question - The following transactions are for Sailing Boats Ltd.
1. On 7 December Sailing Boats Ltd sold $720,000 of inventory to Ships Ahoy Ltd, terms 2/7, n/30. The cost of the inventory sold was $480,000.
2. On 8 December Ships Ahoy Ltd was granted an allowance of $30,000 for inventory purchased on 7 December.
3. On 13 December Sailing Boats Ltd received the balance due from Ships Ahoy Ltd.
Required
Prepare the journal entries to record these transactions on the books of Sailing Boats Ltd. Sailing Boats uses a perpetual inventory system.
Assume that Sailing Boats Ltd received the balance due from Ships Ahoy Ltd on 2 January of the following year instead of 13 December. Prepare the journal entry to record the receipt of payment on 2 January.