Oriole Co. uses the gross method to record sales made on credit. On July 1, 2020, it made sales of 56,000 with terms 2/10 n/30. On July 9, 2020, Oriole received full payment for the July 1 sale. Prepare the required journal entries for Oriole Co. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Question

Business

Teagan Manning

11 January, 17:57

Oriole Co. uses the gross method to record sales made on credit. On July 1, 2020, it made sales of 56,000 with terms 2/10 n/30. On July 9, 2020, Oriole received full payment for the July 1 sale. Prepare the required journal entries for Oriole Co. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

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Allie Oneill · Answer 1

July 1, 2020

Dr. Account Receivable $56,000

Cr. Sales $56,000

July 9, 2020

Dr. Cash $54,880

Dr. Sales Discount $1,120

Cr. Account Receivable $56,000

Explanation:

Credit terms of 2/10, n/30 means there is a discount of 2% is available on payment of due amount within discount period of 10 days after sale with net credit period of 30 days.

As Payment of $56,000 is received within the discount period. So, the discount will be

Discount = $56,000 x 2% = $1,120

Amount Paid = $56,000 - $1,120 = $54,880