Question

On June 14, 2013, Rumsfeld Company sold 100 units of material to Powell Heating and Cooling on account. The units list for 12.000.000 (excluding 10% VAT). On June 15, Powell was granted a 25% discount on total amount of the invoice due to some defects in the material. On June 25, Powell had tranferred money to fully pay (net amount) for the goods. Required: a/ Prepare the journal entry to record the sale. b/ Given the fact that Rumsfeld Company offers 1% discount for all of payment made within 15 day from shipping, prepare the journal entry to record the sale and the payment.

Answer 1

	DATE	ACCOUNT TITLES	DEBIT	CREDIT
	June,14,2013	Accounts Receivable(900000+90000)	990,000
		Sales(12000*100*(1-0.25))		900,000
		VAT Output(900000*10%)		90,000
	June,25	Cash	990,000
		Accounts Receivable		990,000
	b
	June,14,2013	Accounts Receivable	990,000
		Sales		900,000
		VAT Output		90,000
	June,25	Cash	980,100
		Discount granted(900000*1%)	9,000
		VAT input(9000*10%)	900
		Accounts Receivable		990,000