Question
The Hawthorne Manufacturing Company offers customers a 10% discount if they purchase more than $5,000 worth of merchandise in one purchase order. In addition, it
The Hawthorne Manufacturing Company offers customers a 10% discount if they purchase more than $5,000 worth of merchandise in one purchase order. In addition, it also offers credit customers a 2% cash discount if the sales price is paid within 10 days. Any amounts not paid within 10 days are due in 30 days. These repayment terms are stated as 2/10, n/30. On October 5, 2019, Hawthorne sold merchandise at a price of $22,222. The customer paid $13,720 on October 14 and the remaining balance of $6,000 on November 4. The merchandise cost Hawthorne $12,000 to produce. Hawthorne uses a perpetual inventory system.
1. Provide the journal entries using the gross method
2. Provide the journal entries using the net method
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