On June 3, Arnold Company sold to Chester Company merchandise having a sale price of $3,000 with terms of 2/10, n/60, f. o.b. shipping point. An invoice totaling $90, 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.

Journal entries for Arnold Company:

June 3, merchandise sold to Chester Company

Dr Accounts receivable 3,000

    Cr Merchandise inventory 3,000

Dr Cost of goods sold XXX (not specified)

    Cr Sales Revenue 3,000

June 12, payment received from Chester Company

Dr Cash 2,940

Dr Sales discounts 60 ($3,000 x 2%)

    Cr Accounts receivable 3,000

Journal entries for Chester Company:

June 3, merchandise purchased from Arnold Company

Dr Merchandise inventory 3,000

    Cr Accounts payable 3,000

June 8, shipping invoice received

Dr Merchandise inventory 90

    Cr Accounts payable

June 12, payment made to Arnold Company

Dr Accounts payable 3,000

    Cr Cash 2,940

    Cr Purchase discounts 60

June 12, payment made to John Booth transport

Dr Accounts payable 90

    Cr Cash 90

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