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9 April, 00:57

Culver Co. uses the gross method to record sales made on credit. On June 1, 2020, it made sales of $51,000 with terms 4/15, n/45. On June 12, 2020, Culver received full payment for the June 1 sale. Prepare the required journal entries for Culver Co.

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  1. 9 April, 04:28
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    Answer and Explanation:

    Culver Co.

    Journal Entries

    Debit Credit

    June 1, 2020 Accounts receivables $51,000

    Sales $51,000

    Recording sale of goods on credit.

    June 12, 2020 Bank $48,960

    Sales discount (Working 1) $2,040

    Accounts receivables $51,000

    Recording cash received from customer.

    Working 1:

    As per the terms of sale, the customer receives 4% cash discount if the payment is made within 15 days. The customer makes the payment on the 12th day, and thus, receives 4% cash discount.

    Cash discount = 4% x $51,000 = $2,040

    Amount received from customer = $51,000 - $2,040 = $48,960
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