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Question - On June 3, Headland Company sold to Chester Company merchandise having a sale price of $3,600 with terms of 2/10, n/60, f.o.b. shipping point. An invoice totaling $91, terms n/30, was received by Chester on June 8 from John Booth Transport Service for the freight cost. On June 12, the company received a check for the balance due from Chester Company.
Required -
A. Prepare journal entries on the Headland Company books to record all the events noted above under each of the following bases.
(1) Sales and receivables are entered at gross selling price.
(2) Sales and receivables are entered at net of cash discounts.
B. Prepare the journal entry under basis 2, assuming that Chester Company did not remit payment until July 29.
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