On May 12, 2009, Falwell Computing Sold Five Computers to Computing

question 12

Essay

On May 12, 2009, Falwell Computing sold five computers to Computing Plus for $10,000, subject to terms 3/10, n30. Falwell uses the net method of accounting for sales discounts.
Required:
1. Prepare the journal entry to record the sale.
2. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on May 20, 2009.
3. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on June 5, 2009.

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Definitions:

Other Receivable

Accounts receivable that do not fit standard trade transactions, sometimes including loans to employees or advances to suppliers.

Notes Receivable

Claims against others for money, goods, or services evidenced by notes, promises to pay, or receipts.

Bad Debt Expense

An expense recognized by businesses for accounts receivable that are not expected to be collected.

Credit Basis

The terms and conditions under which credit is extended by a lender to a borrower, including repayment schedules and interest rates.