Problem
Journalize the following transactions for Powell Company using the gross method of accounting for sales discounts. Assume a perpetual inventory system. Also, assume a constant gross profit ratio for all items sold. Make sure to enter the day for each separate transaction.
January 7 Sold goods costing $7,860 to Stewart Company on account, $13,100, terms 5/10, n/30.
January 13 Stewart Company was granted an allowance of $2,620 for returned merchandise that was previously purchased on account. The returned goods are in perfect condition.
January 18 Received the amount due from Stewart Company.
Required: prepare journal entry.