Effects of Sales Discounts

Joes Wholesale Auto Parts makes all sales on credit, with terms 2/10, n/30. During 2022, the list price of services provided was $500,000. 60% of his customers paid their bill within the discount period; 40% paid after the discount period.

Joes uses the gross method of recording sales.

1. Compute the amount of sales that Joes recorded for 2022.

2. Compute the amount of cash that Joes collected from these sales.

3. Create the journal entries to record the sales and collection of cash for 2022.