Problem: A company sold supplies on October 1. The total amount of the sale was $25,000 and the invoice for the purchase was issued on October 2. The terms of the sale were 2/10, n/30 and the goods were sold f.o.b. shipping point. Shipping costs were $100, the goods were shipped on October 2nd, and the customer received the goods on October 6. The customer records purchases net of discounts.
Instructions:
Record the journal entries for the seller to properly reflect the all of the above events under each of the following assumptions:
1) The seller records sales and receivables at the gross sales price, and
a) The seller received the proper payment in full on October 10.
b) The seller received the proper payment in full on November 5.
2) The seller records sales and receivables at the net of cash discounts, and
a) The seller received the proper payment in full on October 10.
b) The seller received the proper payment in full on November 5.