Sells merchandise to customers. Cost of inventory is 70% of the selling price. • Lowes uses a gross method to account for sales discount on early receipt of accounts receivables. . The terms for all Account Receivables are 2/10, n/30. Merchandise becomes unreturnable after 5 months. In 2021, the beginning inventory for Lowes was $1,000,000. Lowes' sales transactions during 2021-2022 are as follows: 2021 12/1/2021 Sold customer A on account merchandise for $800,000 12/15/2021 Customer A returned $10,000 merchandise. Established allowance of return. Industry experience 12/31/2021 indicates that 20% of annual gross sales will be returned. 12/31/2021 Established allowance of 30% of the remaining AR balance 2022 2/1/2022 Customer A returned $20,000 merchandise. 4/30/2022 Sales to Customer A become unreturnable. 5/1/2022 Customer A went bankrupt and the remaining AR will not be collectible: 12/31/2022 Established allowance of 30% of the remaining AR balance Which of the following is correct about journal entry Lowe's make on 4/30/20223

Sells merchandise to customers. Cost of inventory is 70% of the selling price. • Lowes uses a gross method to account for sales discount on early receipt of accounts receivables. . The terms for all Account Receivables are 2/10, n/30. Merchandise becomes unreturnable after 5 months. In 2021, the beginning inventory for Lowes was $1,000,000. Lowes' sales transactions during 2021-2022 are as follows: 2021 12/1/2021 Sold customer A on account merchandise for $800,000 12/15/2021 Customer A returned $10,000 merchandise. Established allowance of return. Industry experience 12/31/2021 indicates that 20% of annual gross sales will be returned. 12/31/2021 Established allowance of 30% of the remaining AR balance 2022 2/1/2022 Customer A returned $20,000 merchandise. 4/30/2022 Sales to Customer A become unreturnable. 5/1/2022 Customer A went bankrupt and the remaining AR will not be collectible: 12/31/2022 Established allowance of 30% of the remaining AR balance Which of the following is correct about journal entry Lowe's make on 4/30/20223

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter6: Cash And Receivables

Section: Chapter Questions

Problem 6E

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