The Cycle Shop sells merchandise on credit terms of 2.5/15, n/30. A sale invoiced at $900 (cost of sales $600) was made to Missy Clemons on February 1, 2011. The company uses the gross method of recording sales discounts.

Required:

1. Give the journal entry to record the credit sale. Assume use of the perpetual inventory system.

2. Give the journal entry, assuming that the account was collected in full on February 9, 2011.

3. Give the journal entry, assuming, instead, that the account was collected in full on March 2, 2011.

On March 4, 2011, the company purchased bicycles and accessories from a supplier on credit, invoiced at $8,400; the terms were 3.5/10, n/30. The company uses the gross method to record purchases.

Required:

4. Give the journal entry to record the purchase on credit. Assume the use of the perpetual inventory system.

5. Give the journal entry, assuming that the account was paid in full on March 12, 2011.

6. Give the journal entry, assuming, instead, that the account was paid in full on March 28, 2011.