EFFECTS OF SALES DISCOUNTS Citron Mechanical Systems makes all sales on credit, with terms 2/10, n/30. During 2009, the list price (prediscount) of goods sold was $498,500. Customers paid $350,000

(list price) of these sales within the discount period and the remaining $148,500 (list price)

after the discount period. Citron uses the gross method of recording sales.

Required:

. Compute the amount of sales that Citron recorded for 2009.

. Compute the amount of cash that Citron collected from these sales.

. Prepare a summary journal entry to record these sales and a second summary entry to record the cash collected.

Exercise