Chapter 9, Problem 9.2E

Volume Discounts, Sales Discounts. Sodesta Company offers volume discounts to its customers. Customers buying more than $100,000 in products receive a 1% discount. Customers buying more than $200,000 in products receive a 3% discount. Sodesta also offers sales discounts with payment terms of 2/10, n/30. Sodesta uses the most-likely-amount method and assumes that the customer will take the discount to account for the sales discounts. On July 2, Sodesta made sales of $220,000 on account to Gridar Company. Gridar paid $150,000 on July 12 and the remaining balance on August 1.

Required

1. a. What is the volume discount? What is the sales discount? What is the journal entry when the sale is initially recorded on July 2? Ignore the effect on inventory and cost of goods sold
2. b. What is the journal entry on July 12?
3. c. What is the journal entry on August 1?