Question

a. Sampson Co. sold merchandise to Batson Co. on account, $29,900, terms 2/15, net 45. b. The cost of the merchandise sold is $22,425. c. Batson Co. paid the invoice within the discount period. Assume both Sampson and Batson use a perpetual inventory system. Prepare the entries that Sampson Co. would record for the information above. a. Accounts Payable-Batson Co. Sales b. Cost of Merchandise Sold Merchandise Inventory C Sales Accounts Receivable-Batson Co. Prepare the entries that Batson Co. would record for the information above. a. and b. Merchandise Inventory Accounts Payable-Sampson Co Accounts Payable-Sampson Co Cash

Answer 1

Journal

Account title	Debit	Credit
Accounts Receivable - Batson co.	29,900
Sales		29,900
Cost of goods sold	22,425
Merchandising inventory		22,425
Cash	29,302
Sales discount	598
Accounts receivable - Batson co.		29,900

Working note:

Discount amount = Final amount due x Discount percentage

= 29,900 x 2/100

= $598

Cash to be received = Final amount due - Discount amount

= 29,900 - 598

= $29,302

Journal

Merchandise inventory	29,900
Accounts payable - Sampson co.		29,900
Accounts payable - Sampson co.	29,900
Cash		29,302
Merchandise inventory		598

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