FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Required information
P6-7 (Algo) (Supplement) Recording Sales, Returns, and Bad Debts
[The following information applies to the questions displayed below.]
The following data were selected from the records of Sykes Company for the year ended December 31, Current Year.
Balances January 1, Current Year
Accounts receivable (various
customers)
Allowance for doubtful accounts
$117,000
7,000
In the following order, except for cash sales, the company sold merchandise and made collections on credit terms 3/10,
n/30 (assume a unit sales price of $600 in all transactions).
Transactions during current year
a. Sold merchandise for cash, $258,000.
b. Sold merchandise to R. Smith; invoice price, $11,000.
c. Sold merchandise to K. Miller; invoice price, $24,000.
d. Two days after purchase date, R. Smith returned one of the units purchased in (b) and received account credit.
e. Sold merchandise to B. Sears; invoice price, $23,000.
f. R. Smith paid his account in full within the discount period.
g. Collected $94,000 cash from customer sales on credit in prior year, all within the discount periods.
h. K. Miller paid the invoice in (c) within the discount period.
i. Sold merchandise to R. Roy; invoice price, $23,500.
j. Three days after paying the account in full, K. Miller returned seven defective units and received a cash refund.
k. After the discount period, collected $6,000 cash on an account receivable on sales in a prior year.
1. Wrote off a prior year account of $2,000 after deciding that the amount would never be collected.
m. The estimated bad debt rate used by the company was 3.5 percent of credit sales net of returns.
P6-7 Part 1
Required:
1. Prepare the journal entries for these transactions, including the write-off of the uncollectible account and the adjusting entry for
estimated bad debts. Do not record cost of goods sold.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final
answers to nearest whole dollar amount.
i
View transaction list
Journal entry worksheet
7
8
9
10
11
12
13
Collected $94,000 cash from customer sales on credit in prior year, all within
the discount periods.
Note: Enter debits before credits.
Transaction
g.
Cash
Sales discounts
General Journal
Debit
Credit
94,000
Accounts receivable (prior year)
Record entry
Clear entry
View general journal
Journal entry worksheet
1
6
7
8
9
10
11
12
13
The estimated bad debt rate used by the company was 3.5 percent of credit
sales net of returns.
Note: Enter debits before credits.
Transaction
General Journal
Debit
Credit
m.
Bad debt expense
Allowance for doubtful accounts
Record entry
Clear entry
View general journal
expand button
Transcribed Image Text:Required information P6-7 (Algo) (Supplement) Recording Sales, Returns, and Bad Debts [The following information applies to the questions displayed below.] The following data were selected from the records of Sykes Company for the year ended December 31, Current Year. Balances January 1, Current Year Accounts receivable (various customers) Allowance for doubtful accounts $117,000 7,000 In the following order, except for cash sales, the company sold merchandise and made collections on credit terms 3/10, n/30 (assume a unit sales price of $600 in all transactions). Transactions during current year a. Sold merchandise for cash, $258,000. b. Sold merchandise to R. Smith; invoice price, $11,000. c. Sold merchandise to K. Miller; invoice price, $24,000. d. Two days after purchase date, R. Smith returned one of the units purchased in (b) and received account credit. e. Sold merchandise to B. Sears; invoice price, $23,000. f. R. Smith paid his account in full within the discount period. g. Collected $94,000 cash from customer sales on credit in prior year, all within the discount periods. h. K. Miller paid the invoice in (c) within the discount period. i. Sold merchandise to R. Roy; invoice price, $23,500. j. Three days after paying the account in full, K. Miller returned seven defective units and received a cash refund. k. After the discount period, collected $6,000 cash on an account receivable on sales in a prior year. 1. Wrote off a prior year account of $2,000 after deciding that the amount would never be collected. m. The estimated bad debt rate used by the company was 3.5 percent of credit sales net of returns. P6-7 Part 1 Required: 1. Prepare the journal entries for these transactions, including the write-off of the uncollectible account and the adjusting entry for estimated bad debts. Do not record cost of goods sold. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to nearest whole dollar amount. i View transaction list Journal entry worksheet 7 8 9 10 11 12 13 Collected $94,000 cash from customer sales on credit in prior year, all within the discount periods. Note: Enter debits before credits. Transaction g. Cash Sales discounts General Journal Debit Credit 94,000 Accounts receivable (prior year) Record entry Clear entry View general journal Journal entry worksheet 1 6 7 8 9 10 11 12 13 The estimated bad debt rate used by the company was 3.5 percent of credit sales net of returns. Note: Enter debits before credits. Transaction General Journal Debit Credit m. Bad debt expense Allowance for doubtful accounts Record entry Clear entry View general journal
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