Appendix 1: Net method for sales discounts

Schofield Co. sold merchandise on account to Bernard Retail Inc. for $15,000, terms 2/10, n/30. The cost of the merchandise sold was $8,000. Assuming Schofield Co. uses the net method of recording sales discounts.

a. Journalize the entries to record the sale. If an amount box does not require an entry, leave it blank.

	Account	Debit	Credit
	Accounts Payable-Bernard Retail Inc.Accounts Receivable-Bernard Retail Inc.CashSalesSales Discounts	- Select -	- Select -
	Accounts Payable-Bernard Retail Inc.Accounts Receivable-Bernard Retail Inc.CashSalesSales Discounts	- Select -	- Select -
	Accounts Receivable-Bernard Retail Inc.CashCost of Goods SoldDelivery ExpenseInventory	- Select -	- Select -
	Accounts Receivable-Bernard Retail Inc.CashCost of Goods SoldDelivery ExpenseInventory	- Select -	- Select -

b. Journalize the receipt of payment within the discount period. If an amount box does not require an entry, leave it blank.

	Account	Debit	Credit
	Accounts Payable-Bernard Retail Inc.Accounts Receivable-Bernard Retail Inc.CashCost of Goods SoldSales	- Select -	- Select -
	Accounts Payable-Bernard Retail Inc.Accounts Receivable-Bernard Retail Inc.CashCost of Goods SoldSales	- Select -	- Select -

c. Journalize the receipt of payment assuming it is made beyond the discount period. If an amount box does not require an entry, leave it blank.

	Account	Debit	Credit
	Accounts Payable-Bernard Retail Inc.Accounts Receivable-Bernard Retail Inc.CashCost of Goods SoldSales	- Select -	- Select -
	Accounts Payable-Bernard Retail Inc.CashInventorySalesSales Discounts	- Select -	- Select -
	Accounts Payable-Bernard Retail Inc.Accounts Receivable-Bernard Retail Inc.CashSales DiscountsSales Returns and Allowances	- Select -	- Select -