Question

Pierce Company sold merchandise to Stanton Company on account FOB shipping point, 1/10, net 30, for $9,100. Pierce prepaid the $261 shipping charge. Which of the following entries does Pierce make for this sale? Oa. Accounts Receivable-Stanton, debit $9,361; Sales, credit $9,361 Ob Accounts Receivable-Stanton, debit $9,100; Sales, credit $9,100 Oc. Accounts Receivable-Stanton, debit $9,100; Sales, credit $9,100, and Delivery Expense, debit $261; Cash, credit $261 Od. Accounts Receivable --Stanton, debit $9,009; Sales, credit $9,009, and Accounts Receivable - Stanton, debt $261; Cash, credit $261

Answer 1

The entry that pierce make for the sale transaction is

The correct option is

• d) Accounts recievable-Stanton, debit $9009, Sales, credit $9009 and Delivery expense, debit $261, Cash, credit $261.

Explanation:

The pierce company sold goods of $9100 to Stanton on account with a credit terms 1/10, net 30. Under net method, it has to be assumed that discount is availed.

Discount = $9100×1% = $91

So, now the company should record the net accounts recievable balance amount i.e., $9009. The entry is as follows

Accounts recievable-Stanton	$9009
Sales		$9009

- Accounts recievable has been debited since the cash is to be recievable which is a current asset for company

-Sales has been credited since the revenue have been accrued.

And Pierce company prepaid the shipping charge of $261 which is need to be recovered from the stanton and the same as recorded as accounts reciveable. The entry is as follows

Accounts recievable	$261
Cash		$261

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