Gordon's Grocers purchases bread from Buddy's Bread Company at $$1\mathrm{.}25$ per loaf. Gordon's recently engaged in a customer service contract with Buddy's to purchase $125,000$ loaves of Buddy's bread. Buddy offered credit to Gordon's at terms of $1/15,$ n$/30.$ Buddy expects Gordon to pay within the discount period.

Required:

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

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

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

Accounts Receivable $$

Record sale

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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.

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

Record collection within discount period

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Companies should record the revenue and associated receivable at the amount they expect to receive from the customer. For customers expectec take the discount, sales revenue should be recorded at the net amount.

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