Gordon$$s Grocers purchases bread from Buddy$$s Bread Company at $$1\mathrm{.}80$ per loaf. Gordon$$s recently engaged in a customer service contract with Buddy$$s to purchase $120,000$ loaves of Buddy$$s bread. Buddy offered credit to Gordon$$s at terms of $3/15,$ n$/45.$ Buddy expects Gordon to pay within the discount period.

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If an amount box does not require an entry, leave it blank.

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Prepare the journal entry to record the sale using the net method.

Hint: In calculating your answer, use one minus the discount rate $($eg$.1-0\mathrm{.}02=\mathrm{.}98)$

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Accounts Receivable

Sales Revenue

Record sale

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Feedback

For customers expected to take the discount, sales revenue should be recorded at the net amount; For customers expected to fail to pay in the discount period, sales revenue should be recorded at the gross amount.

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Then, prepare the journal entry assuming the payment is made within $10$ days $($within the discount period$).$

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Cash

Accounts Receivable

Record collection within discount period