1. **Problem Statement:** Harwell Company sold 1,400 tires at 55 each on July 15, 2024, with terms 2/15, n/30, using the gross method. We need to prepare journal entries for the sale and collections on July 23 and August 15. 2. **Formula and Rules:** - Total sale amount = quantity \( \times \) price per tire. - Terms 2/15, n/30 means a 2% discount if paid within 15 days; otherwise, full amount due in 30 days. - Gross method records sales at full invoice price; discounts are recorded only if taken. 3. **Calculations:** - Total sale = \(1400 \times 55 = 77000\). - Discount if paid within 15 days = 2% of 77000 = \(0.02 \times 77000 = 1540\). 4. **Journal Entries for Sale on July 15:** - Debit Accounts Receivable 77000 - Credit Sales Revenue 77000 5. **Collection on July 23 (within discount period):** - Payment amount = \(77000 - 1540 = 75460\) - Debit Cash 75460 - Debit Sales Discounts 1540 - Credit Accounts Receivable 77000 6. **Collection on August 15 (after discount period):** - Payment amount = full 77000 - Debit Cash 77000 - Credit Accounts Receivable 77000 **Summary:** - Sale recorded at full amount. - Discount recorded only if payment is within discount period. Final answers: **1. Sale and collection on July 23:** - July 15: Dr Accounts Receivable 77000; Cr Sales Revenue 77000 - July 23: Dr Cash 75460; Dr Sales Discounts 1540; Cr Accounts Receivable 77000 **2. Sale and collection on August 15:** - July 15: Dr Accounts Receivable 77000; Cr Sales Revenue 77000 - August 15: Dr Cash 77000; Cr Accounts Receivable 77000