Cycle Wholesaling sells merchandise on credit terms of 2/10, n/30. A sale for $1,600 (cost of goods sold of $960) was made to Sarah's Cycles on February 1, 2010. Assume Cycle Wholesaling uses a perpetual inventory system.

Cycle Wholesaling sells merchandise on credit terms of 2/10, n/30. A sale for $1,600 (cost of goods sold of $960) was made to Sarah's Cycles on February 1, 2010. Assume Cycle Wholesaling uses a perpetual inventory system.

 

Requirement 1:

Prepare the journal entry Cycle Wholesaling would make to record the sale to Sarah’s Cycles. (Omit the "$" sign in your response.)

General Journal	Debit	Credit
Accounts receivable
Sales revenue
Cost of goods sold
Inventory

 

Requirement 2:

Prepare the journal entry to record the collection of the account, assuming it was collected in full on February 9, 2010. (Omit the "$" sign in your response.)

General Journal	Debit	Credit
Cash
Sales discounts
Accounts receivable

 

Requirement 3:

Prepare the journal entry, assuming, instead, that the account was collected in full on March 2, 2010. (Omit the "$" sign in your response.)

General Journal	Debit	Credit
Cash
Accounts receivable

 

Requirement 4:

Calculate the gross profit percentage for the sale to Sarah's Cycles, assuming the account was collected in full on February 9, 2010. (Round your answer to 1 decimal place. Omit the "%" sign in your response.)

Gross profit percentage

%

Explanation:

2:

Cash ($1,600 × 98%) = $1,568

Sales Discounts ($1,600 × 2%) = 32

4:

Gross profit   percentage	=	Gross profit	× 100	=	608*	× 100	= 38.8%
		Net sales			1,568**

*608 = $1,600 – 960 – (2% × $1,600)

** $1,568 = $1,600 – (2% × $1,600)