The Giles Agency offers a 10% trade discount when providing advertising services of $1,000 or more to its customers. Audrey's Antiques decides to purchase advertising services of $2,800 (not including the trade discount), while Michael's Motors purchases only $630 of advertising. Both services are provided on account. Record both transactions for the Giles Agency, accounting for any trade discounts.

Question

Business

Kinley

28 November, 13:50

The Giles Agency offers a 10% trade discount when providing advertising services of $1,000 or more to its customers. Audrey's Antiques decides to purchase advertising services of $2,800 (not including the trade discount), while Michael's Motors purchases only $630 of advertising. Both services are provided on account. Record both transactions for the Giles Agency, accounting for any trade discounts.

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Hamilton · Answer 1

The journal entries are shown below:

Accounts receivable A/c Dr $2,520 ($2,800 - $2,800 * 10%)

To Service revenue A/c $2,520

(Being service provided is recorded by considering the discount)

Accounts receivable A/c Dr $630

To Service revenue A/c $630

(Being service provided is recorded without applying the discount)