Prepare journal entries for the transactions above. Presented below are two inde
ID: 2481454 • Letter: P
Question
Prepare journal entries for the transactions above. Presented below are two independent situations. On January 6, Brumbaugh Co. sells merchandise on account to Pryor Inc. for dollar 7,000, terms 2/10, n/30. On January 16. Pryor Inc. pays the amount due. Prepare the entries on Brumbaugh's books to record the sale and related collection. On January 10, Andrew Farley uses his Paltrow Co. credit card to purchase merchandise from Paltrow Co. for dollar 9,000. On February 10, Farley is billed for the amount due of dollar 9,000. On February 12, Farley pays dollar 5,000 on the balance due. On March 10, Farley is billed for the amount due, including interest at 1 percentage per month on the unpaid balance as of February 12. Prepare the entries on Paltrow Co.'s books related to the transactions that occurred on January 10, February 12, and March 10.Explanation / Answer
Date Accounts Title Dr Cr 6-Jan $7,000 Sales $7,000 Sales on account 16-Jan Cash $6,860 Cash Discount 140 Accounts Receivable (Pryor Inc) $7,000.00 Being payment received with the credit period allowed so given cash discount) b) 10-Jan Accounts Receivable (Andrew farley) $9,000 Sales $9,000 (being sales made on account to andrew through company credit card) 12-Feb cash $5,000 Accounts Receivable (Andrew farley) $5,000 (being partial payment received) 10-Mar Accounts Receivable (Andrew farley) 80 Interest Income On delayed payments 80 (Being interest charged on delayed paymnet $4000*2%) and billed total $4000+80=$4880