Exercise 7-5

On June 3, Crane Company sold to Chester Company merchandise having a sale price of $5,600 with terms of 3/10, n/60, f.o.b. shipping point. An invoice totaling $95, terms n/30, was received by Chester on June 8 from John Booth Transport Service for the freight cost. On June 12, the company received a check for the balance due from Chester Company.

Prepare journal entries on the Crane Company books to record all the events noted above under each of the following bases.

(1) Sales and receivables are entered at gross selling price. (2) Sales and receivables are entered at net of cash discounts.

(If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

No. Date Account Titles and Explanation Debit Credit (1) June 3 June 12 June 12 (2) June 3 June 12 June 3 June 12

SHOW LIST OF ACCOUNTS LINK TO TEXT

Prepare the journal entry under basis 2, assuming that Chester Company did not remit payment until July 29. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Date Account Titles and Explanation Debit Credit July 29