Northern Company Sold $4,000 of Goods to Southern Company on Credit

question 157

Essay

Northern Company sold $4,000 of goods to Southern Company on credit on May 1. At the time of the sale, Northern recorded a debit to Trade Receivables and a credit to Sales Revenue for $4,000. Terms were 2/10, n/30. Required: Present the entries Northern would record for each of the following independent situations:
A. Southern paid the balance due, less the discount, on May 10.
B. Southern returned half of the goods for credit on May 4. Paid the balance due , less the discount, on May 10.
C. Southern paid their bill on May 30 (there were no returns).

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Definitions:

Cost Center

A department or unit within an organization that does not directly add to profit but still incurs costs.

Departmental Contribution To Overhead

The amount of money that each department contributes towards covering the company's indirect costs or overheads.

Profit Center

A segment or division within a company that is responsible for generating its own revenue and profit, tracked separately for performance analysis.

Responsibility Accounting System

A system of accounting that tracks financial performance and costs at the level of individual responsibility centers, encouraging managerial accountability.