Question

Waterway Company sells goods to Danone Inc. by accepting a note receivable on January 2, 2020. The goods have a sales price of $550,100 (cost of $510,000). The terms are net 30. If Danone pays within 5 days, however, it receives a cash discount of $10,100. Past history indicates that the cash discount will be taken. On January 28, 2020, Danone makes payment to Waterway for the full sales price. Prepare the journal entry(ies) to record the sale and related cost of goods sold for Waterway Company on January 2, 2020, and the payment on January 28, 2020. Assume that Waterway Company records the January 2, 2020, transaction using the net method. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter for the amounts.) Prepare the journal entry(ies) to record the sale and related cost of goods sold for Waterway Company on January 2, 2020, and the payment on January 28, 2020. Assume that Waterway Company records the January 2, 2020, transaction using the gross method. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter Ofor the amounts.)

Answer 1

Ans: Journal entry to record Net method:

date	Account title and explanation	Debit($)	Credit($)
Jan 2,2020	Accounts receivables Dr.	540,000
	To sales		540,000
	( to record sales)
Jan 2,2020	Cost of goods sold Dr.	$510,000
	To Inventory		$510,000
	( to record costs of goods sold)
Jan 28,2020	Cash Dr.	$550,100
	To Accounts receivables		$540,000
	To Sales discount forfeited		$10,100
	( to record payment received)

B). Using gross method:

Date	Account title and explanation	Debit($)	Credit($)
Jan 2,2020	Accounts receivables Dr.	$550,100
	To sales		$550,100
	( to record sales)
Jan 2, 2020	Cost of goods sold Dr.	$510,000
	To inventory		$510,000
	(to record cost of goods sold)
Jan 28,2020	Cash Dr	$550,100
	To Accounts receivables		$550,100
	( to record payment received)