Presented below are selected transactions of Pale Force Company

Question:

Presented below are selected transactions of Pale Force Company. Pale Force sells in large quantities to other companies and also sells its product in a small retail outlet.

March 1 Sold merchandise on account to CC Company for $3,000, terms 2/10, n/30.
March 3 CC Company returned merchandise worth $500 to Pale Force.
March 9 Pale Force collected the amount due from CC Company from the March 1 sale.
March 15 Pale Force sold merchandise for $400 in its retail outlet. The customer used his Pale Force credit card.
March 31 Pale Force added 1.5% monthly interest to the customer’s credit card balance.

Instructions

Prepare journal entries for the transactions above. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.)

Answer:

March 1 Sold merchandise on account to CC Company for $3,000, terms 2/10, n/30.
Dr Accounts receivable $3,000
Cr Sales $3,000

March 3 CC Company returned merchandise worth $500 to Pale Force.
Dr Sales returns and allowances $500
Cr AR $500

March 9 Pale Force collected the amount due from CC Company from the March 1 sale.
Dr Cash 2,450
Dr Sales discounts $50
Cr AR $2,500
Since the amt was paid within 10 days, 2% discount was given

March 15 Pale Force sold merchandise for $400 in its retail outlet. The customer used his Pale Force credit card.
Dr AR $400
Cr Sales $400

March 31 Pale Force added 1.5% monthly interest to the customer’s credit card balance.
Dr Interest receivable $3
Cr Interest revenue $3
For simplicity sake, I took half a month, so $400 x 1.5% x 1/2

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