Exercise 7: Journalize sales transactions

Presented below are transactions related to Xu Company.

1. On December 3, Xu Company sold HK$500,000 of merchandis to Hashmi Co., terms 2/10, n/30, FBO shipping point. The cost of the merchandise sold was HKS350,000.

2. On December 8, Hashmi Co. was granted an allowance of HK$27,000 for

merchandise purchased on December 3.

3. On December 13, Xu Company received the balance due from Hashmi Co.

Instructions

(a) Prepare the journal entries to record these transactions on the boks of Xu Company using a perpetual inventory system.

(b) Assume that Xu Company received the balance due from Hashmi Co. on January 2 of the following year instead of December 13. Prepare the journal entry to record the receipt of payment on January 2.