Data Recovery Services (DRS) specializes in data recovery from crashed hard drives. The price charged varies based on the extent of damage and the amount of data being recovered. DRS offers a 15% discount to students and faculty at educational institutions. Consider the following transactions during the month of June. June 10 Rashid’s hard drive crashes and he sends it to DRS. June 12 After initial evaluation, DRS e-mails Rashid to let him know that full data recovery will cost $2,200. June 13 Rashid informs DRS that he would like them to recover the data and that he is a student at UCLA, qualifying him for a 15% educational discount and reducing the cost by $330 ( = $2,200 × 15%). June 16 DRS performs the work and claims to be successful in recovering all data. DRS asks Rashid to pay within 30 days of today’s date, offering a 4% discount for payment within 10 days. June 19 When Rashid receives the hard drive, he notices that DRS did not successfully recover all data. Approximately 20% of the data has not been recovered and he informs DRS. June 20 DRS reduces the amount Rashid owes by 20%. June 30 Rashid pays the amount owed. Required: 1. Record the necessary transaction(s) for Data Recovery Services on each date. 2. Show how net revenues would be presented in the income statement. 3. Calculate net revenues if Rashid had paid his bill on June 25.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Data Recovery Services (DRS) specializes in data recovery from crashed hard drives. The price charged varies based on the extent of damage and the amount of data being recovered. DRS offers a 15% discount to students and faculty at educational institutions. Consider the following transactions during the month of June.

June 10	Rashid’s hard drive crashes and he sends it to DRS.
June 12	After initial evaluation, DRS e-mails Rashid to let him know that full data recovery will cost $2,200.
June 13	Rashid informs DRS that he would like them to recover the data and that he is a student at UCLA, qualifying him for a 15% educational discount and reducing the cost by $330 ( = $2,200 × 15%).
June 16	DRS performs the work and claims to be successful in recovering all data. DRS asks Rashid to pay within 30 days of today’s date, offering a 4% discount for payment within 10 days.
June 19	When Rashid receives the hard drive, he notices that DRS did not successfully recover all data. Approximately 20% of the data has not been recovered and he informs DRS.
June 20	DRS reduces the amount Rashid owes by 20%.
June 30	Rashid pays the amount owed.

Required:

1. Record the necessary transaction(s) for Data Recovery Services on each date.
2. Show how net revenues would be presented in the income statement.
3. Calculate net revenues if Rashid had paid his bill on June 25.

Journal entry worksheet
<
1
Date
June 10
2
3
Rashid's hard drive crashes and he sends it to DRS.
Note: Enter debits before credits.
Record entry
4 5 6 7
General Journal
Clear entry
Debit
Credit
View general journal
>

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