Question

Presented below is information from Perez Computers Incorporated.

July 1 Sold \(20,000 of computers to Robertson Company with terms 3/15, n/60. Perez uses the gross method to record cash discounts. Perez estimates allowances of \)1,300 will be honored on these sales.

10 Perez received payment from Robertson for the full amount owed from the July transactions.

17 Sold $200,000 in computers and peripherals to The Clark Store with terms of 2/10, n/30.

30 The Clark Store paid Perez for its purchase of July 17.

Instructions

Prepare the necessary journal entries for Perez Computers.

Short answer

Debit and credit columns of journal totals$440,000.

Step-by-step solution

Definition of Gross Method

A method used to record journal entry for goods sold on cash discount terms, under which gross amount of sales is reported, is known as gross method. Under this method, discount is accounted for separately when a cash payment is received.

Journal entries

Date	Accounts and Explanation	Debit $	Credit $
July 1	Accounts receivables	$20,000
	Sales		$20,000
	(To record the credit sales made by the business entity)
July 10	Cash	$19,400
	Discount allowed	$600
	Accounts receivables		$20,000
	(To record the cash received from receivables)
July 17	Accounts receivables	$200,000
	Sales revenue		$200,000
	(To record the sales made on account)
July 30	Cash	$200,000
	Accounts receivables		$200,000
	(To record the cash received from receivables)