Answer:
The Journal entries are as follows:
1. On December 3,
Accounts receivables A/c Dr. $500,000
To sales A/c $500,000
(To record the sales on account)
Cost of goods sold A/c Dr. $330,000
To merchandise inventory A/c $330,000
(To record the cost of goods sold)
2. On December 8,
Sales return and allowance A/c Dr. $25,000
To accounts receivable $25,000
(To record the Sales return and allowance)
3. On December 13,
Cash A/c Dr. $470,250
Sales discount A/c Dr. $4,750
To accounts receivables $475,000
(To record the balance due from Arte Co.)
Workings:
Sales discount = $475,000 × 0.01
= $4,750
Note: Terms 1/10 and n/30.
Cash = accounts receivables - Sales discount
= $475,000 - $4,750
= $470,250
