Problem:
On June 3, Arnold Company sold to Chester Company merchandise having a sale price of $5,700 with terms of 3/10, n/60, f.o.b. shipping point. An invoice totaling $99, terms n/30, was received by Chester on June 8 from John Booth Transport Service for the freight cost. On June 12, the company received a check for the balance due from Chester Company.
Required:
Question 1: Prepare journal entries on the Arnold Company books to record all the events noted above under each of the following bases: 1) Sales and receivables are entered at gross selling price. 2) Sales and receivables are entered at net of cash discounts.
Question 2: Prepare the journal entry under basis 2, assuming that Chester Company did not remit payment until July 29.
Note: Please show how to work it out.