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Sales Discounts Taken

Gordons Grocers purchases bread from Buddys Bread Company at $1.55 per loaf. Gordons recently engaged in a customer service contract with Buddys to purchase 125,000 loaves of Buddys bread. Buddy offered credit to Gordons at terms of 3/15, n/45. Buddy expects Gordon to pay within the discount period.

Required:

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 - 0.02 = .98)

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

Record collection within discount period