A&M Electronics is a wholesaler that sells on terms of 33/10, n/30. Suppose it sold video equipment to Wesco for $325,000

on open account on May 10. Payment (net of cash discount) was received on

May19.

Requirements

1.

By using the balance sheet equation framework, analyze the two transactions for A&M Electronics using the gross method for cash discounts.

2.

Prepare the journal entries. Sold video equipment (on terms of 33/10,n/30) to Westco for $325,000 on open account on May 10.

Assets			=	Liabilities	+	Stockholder's Equity
Cash	+	Accounts Receivable	=	Accounts Payable	+	Sales	+	Cash Discounts on Sales
	+		=		+		+

Payment (net of cash discount) was received on May 19

Assets			=	Liabilities	+	Stockholder's Equity
Cash	+	Accounts Receivable	=	Accounts Payable	+	Sales	+	Cash Discounts on Sales
	+		=		+		+

Requirement 2. Prepare the journal entries.

Date	Accounts	Debit	Credit
May 10

Payment (net of cash discount) was received on May 19

Date	Accounts	Debit	Credit
May 19

Possible choices for accounts***

-Accounts payable

-Accounts receivable

-Cash

-Cash discounts on sales

-Sales

-Sales returns and allowances