On May 7, Juanita Construction provides services on account to Michael Wolfe for $4,000. Michael pays for those services on May 13.

Required:

1. For Juanita Construction, record the service on account on May 7 and the collection of cash on May 13.

2. Record cash sales with a trade discount (LO5-2)

See the explanation below.

Explanation:

1. For Juanita Construction, record the service on account on May 7 and the collection of cash on May 13.

Date Details Dr ($) Cr ($)

May 7 Account receivable 4,000

Sales revenue 4,000

To record service provided to Michael Wolfe on account

May 13 Cash 4,000

Account receivable 4,000

To record cash collected form Michael Wolfe

2. Record cash sales with a trade discount (LO5-2)

If we assume a trade discount of 2% is given by Juanita Construction to Michael Wolfe, we will have:

Trade discount = 2% * $4,000 = $80

The accounting entries will be as follows:

Date Details Dr ($) Cr ($)

May 7 Account receivable 3,920

Trade discount 80

Sales revenue 4,000

To record service provided to Michael Wolfe on account

May 13 Cash 3,920

Account receivable 3,920

To record cash collected form Michael Wolfe