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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
What should I put for the red marked box if the answer is not "Allowance for sales returns and allowances"?

Transcribed Image Text:Presented below is information from Novak Computers Incorporated.
July 1
10
17
30
Prepare the necessary journal entries for Novak Computers. (If no entry is required, select "No Entry" for the account titles and enter O for
the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before
credit entries. Record journal entries in the order presented in the problem.)
Date
July 1
July 10
Sold $25,600 of computers to Robertson Company with terms 3/15, n/60. Novak uses the gross method to record cash
discounts. Novak estimates allowances of $1,664 will be honored on these sales. (Novak records these estimates at point
of sale.)
Novak received payment from Robertson for the full amount owed from the July transactions.
Sold $256,000 in computers and peripherals to The Clark Store with terms of 2/10, n/30.
The Clark Store paid Novak for its purchase of July 17.
July 17
July 30
Account Titles and Explanation
Accounts Receivable
Sales Revenue
(To record sales revenue.)
Sales Returns and Allowances
Allowance for Sales Returns and Allowances
(To record allowance for sales returns.)
Cash
Sales Discounts
Accounts Receivable
Accounts Receivable
Sales Revenue
Cash
Accounts Receivable
Debit
25600
1664
24832
768
256000
256000
Credit
25600
1664
25600
256000
256000
Expert Solution
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- How does an inventory error effect the financial statements?arrow_forwardDecreases in the seller's receivable from a customer's return of merchandise or from granting the customer an allowance from the amount owed to the seller. Select one: O a. Freight Out b. Purchases Discount and Allowances c. Freight In d. Sales Discount and Allowancesarrow_forwardHow do you determine the invoice of merchandise returned?arrow_forward
- A receiving report is filled out when we receive: An inventory shipment from a vendor. Items that a customer is authorized to return from a previous sale. A payment on a customer's account. a and b only. Answer is not the First option!arrow_forwardIf a customer purchases merchandise on credit and returns the defective merchandise beforepayment, what accounts would recognize this transaction?A. sales discount, cashB. sales returns and allowances, cashC. accounts receivable, sales discountD. accounts receivable, sales returns and allowancesarrow_forwardwhat are the most significant differences between uncollectible account expense and allowance for uncollectible accounts?arrow_forward
- explain your answer and do not plagraized form anywherearrow_forwardWhen goods are sold on a bill-and-hold basis, what conditions must be met to recognize revenue upon receipt of the order?arrow_forwardYour landscaping company can lease a truck for $9,000 a year (paid at year-end) for 7 years. It can instead buy the truck for $48,000. The truck will be valueless after 7 years. The interest rate your company can earn on its funds is 8%. a. What is the present value of the cost of leasing? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. Is it cheaper to buy or lease? c. What is the present value of the cost of leasing if the lease payments are an annuity due, so the first payment comes immediately? (Do not round intermediate calculations. Round your answer to 2 decimal places.) d. Is it now cheaper to buy or lease?arrow_forward
- Which of the following is a limitation of the direct write-off method of accounting for uncollectible? The direct write-off method overstates assets on the balance sheet. The direct write-off method does not match expenses against revenue very well. The direct write-off method does not set up an allowance for uncollectible. All of the abovearrow_forwardWhat can be the effect of inventory errors on the financial reports? How can these errors be corrected?arrow_forward
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