FINANCIAL ACCOUNTING (LL)-W/CONNECT
FINANCIAL ACCOUNTING (LL)-W/CONNECT
10th Edition
ISBN: 9781260696295
Author: Libby
Publisher: MCG
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Chapter 6, Problem 7P
To determine

Prepare the journal entries for each of the transactions.

Expert Solution
Check Mark

Explanation of Solution

Sales are an activity of selling the merchandise inventory of a business.

Prepare the journal entry.

DateAccount titles and explanationDebit ($)Credit ($)
(a)Cash235,000 
 Sales revenue 235,000
 (To record the sale of merchandise for cash)  
 
(b)Accounts receivable11,500 
 Sales revenue 11,500
 (To record the sale of merchandise on account)  
 
(c)Accounts receivable26,500 
 Sales revenue 26,500
 (To record the sale of merchandise on account)  
 
(d)Sales returns and allowances500 
        Accounts receivable 500
 (To record the sales return and allowance)  
 
(e)Accounts receivable24,000 
 Sales revenue 24,000
 (To record the sale of merchandise on account)  
 
(f)Cash10,780 (2) 
 Sales discounts220 (1) 
 Accounts receivable 11,000
 (To record the collection of cash on account within the period)  
 
(g)Cash98,000 
 Sales discounts2,000 (4) 
 Accounts receivable 100,000 (3)
 (To record the collection of cash on account within the period)  
 
(h)Cash25,970 (6) 
 Sales discounts530 (5) 
 Accounts receivable 26,500
 (To record the collection of cash on account within the period)  
 
(i)Accounts receivable19,000 
 Sales revenue 19,000
 (To record the sale of merchandise on account)  
 
(j)Sales returns and allowances3,500 (7) 
           Cash 3,430 (9)
           Sales discounts 70 (8)
 (To record the sales returns and allowances)  
 
(k)Cash6,000 
        Accounts receivable 6,000
 (To record the collection of cash on account after the period)  
 
(l)Allowance for doubtful account3,000 
 Account receivable 3,000
 (To record the write-off of uncollectible account receivable )  
 
(m)Bad debt expense1,155 (10) 
     Allowance for doubtful accounts 1,155
 (To record the bad debt expense)  

Table (1)

Working Notes:

Calculate sales discount of 2% for the amount of $11,000 collected from R.

Sales discount = Sales × 2% discount= $11,000×2%= $220 (1)

Determine cash collected from R.

Cash = Sales revenue – Credit card discounts=$11,000$220(1)=$10,780 (2)

Calculate the total accounts receivable amount.

Accountsreceivable=$98,00098×100=100,000 (3)

Determine sales discount given to customer.

Sales discount = Account receivable – Cash received=$100,000(3)$98,000=$2,000 (4)

Calculate sales discount of 2% for the amount of $26,500 collected from M.

Sales discount = Sales × 2% discount= $26,500×2%= $530 (5)

Determine cash collected from M.

Cash = Sales revenue – Credit card discounts=$26,500$530(5)=$25,970 (6)

Calculate the amount of sales returns made from M.

Sales return =Number of items return×Unit sales price=7×$500= $3,500 (7)

Calculate sales discount of 2% for the amount of $3,500.

Sales discount = Sales return × 2% discount= $3,500(7)×2%= $70 (8)

Determine cash returned to M.

Cash = Sales return – Sales discounts=$3,500(7)$70(8)=$3,430 (9)

Calculate the bad debt expense.

Bad debt expense = NetSales×1.5% Bad debt rate= $77,000(11)×1.5%= $1,155 (10)

Calculate the net sales.

Calculate net sales = Credit salesSales returns[($11,500+$26,500+$24,000+$19,000)($500+$3,500)]= $81,000$4,000=$77,000 (11)

2.

To determine

Show how the accounts related to the preceding sale and collection activity should be shown on the income statement.

2.

Expert Solution
Check Mark

Explanation of Solution

Income statement: This is a financial statement that shows the net income earned or net loss suffered by a Company through reporting all the revenues earned and expenses incurred by the company over a specific period of time. An income statement is also known as an operations statement, an earnings statement, a revenue statement, or a profit and loss statement. The net income is the excess of revenue over expenses.

Show the accounts related to the preceding sale and collection activity should be shown on the income statement.

Company S
Income Statement
As of December 31
ParticularsAmount  ($)

Sales Revenue

[$235,000+$11,500+$26,500+$24,000+$19,000]

316,000
Less: Sales Returns and Allowances ($3,500+$500)4,000
Less: Sales Discount ($220+$2,000+$530$70)2,680
Net Sales Revenue309,320
Operating Expenses: 
Bad Debt Expense1,155

Table (2)

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Chapter 6 Solutions

FINANCIAL ACCOUNTING (LL)-W/CONNECT

Ch. 6 - Prob. 11QCh. 6 - Prob. 12QCh. 6 - Prob. 13QCh. 6 - Prob. 14QCh. 6 - Prob. 15QCh. 6 - Prob. 1MCQCh. 6 - 2. Gross sales total $300,000, one-half of which...Ch. 6 - 3. A company has been successful in reducing the...Ch. 6 - 4. When a company using the allowance method...Ch. 6 - 5. You have determined that Company X estimates...Ch. 6 - Prob. 6MCQCh. 6 - Prob. 7MCQCh. 6 - 8. When using the allowance method, as bad debt...Ch. 6 - 9. Which of the following best describes the...Ch. 6 - Prob. 10MCQCh. 6 - Prob. 1MECh. 6 - Reporting Net Sales with Sales Discounts. Credit...Ch. 6 - Recording Bad Debts Prepare journal entries for...Ch. 6 - Determining Financial Statement Effects of Bad...Ch. 6 - Determining the Effects of Credit Policy Changes...Ch. 6 - Prob. 6MECh. 6 - Prob. 7MECh. 6 - During the months of January and February, Hancock...Ch. 6 - E6-2 Reporting Net Sales with Credit Sales, Sales...Ch. 6 - The following transactions were selected from...Ch. 6 - Griffin Shoe Company records Sales Returns and...Ch. 6 - Evaluating the Annual Interest Rate Implicit in a...Ch. 6 - Assume that on June 30, Dell sells a laptop...Ch. 6 - Assume that Verizon normally sells a Samsung S9...Ch. 6 - Reporting Bad Debt Expense and Accounts...Ch. 6 - Recording Bad Debt Expense Estimates and...Ch. 6 - Recording Bad Debt Expense Estimates and...Ch. 6 - Determining Financial Statement Effects of Bad...Ch. 6 - Recording and Determining the Effects of Bad Debt...Ch. 6 - Computing Bad Debt Expense Using Aging...Ch. 6 - Recording and Reporting a Bad Debt Estimate Using...Ch. 6 - Recording and Reporting a Bad Debt Estimate Using...Ch. 6 - Siemens is one of the world’s largest electrical...Ch. 6 - Wolverine World Wide designs and markets Merrell,...Ch. 6 - Inferring Bad Debt Write-Offs and Cash Collections...Ch. 6 - Microsoft develops, produces, and markets a wide...Ch. 6 - A recent annual report for CVS contained the...Ch. 6 - Recording, Reporting, and Evaluating a Bad Debt...Ch. 6 - Recording, Reporting, and Evaluating a Bad Debt...Ch. 6 - Recording, Reporting, and Evaluating a Bad Debt...Ch. 6 - A recent annual report for FedEx contained the...Ch. 6 - A recent annual report for Apple Inc. contained...Ch. 6 - Prob. 26ECh. 6 - Prob. 27ECh. 6 - Prob. 28ECh. 6 - Prob. 29ECh. 6 - Reporting Net Sales and Expenses with Discounts,...Ch. 6 - Dunkin Brands is a specialty coffee roaster and...Ch. 6 - Blue Skies Equipment Company uses the aging...Ch. 6 - Preparing an Income Statement and Computing the...Ch. 6 - Prob. 5PCh. 6 - Prob. 6PCh. 6 - Prob. 7PCh. 6 - Reporting Net Sales and Expenses with Discounts,...Ch. 6 - AP6-2 Recording Bad Debts and Interpreting...Ch. 6 - Assume that Briggs & Stratton Engines Inc. uses...Ch. 6 - Preparing an Income Statement and Computing the...Ch. 6 - Prob. 5APCh. 6 - CON6-1 Computing Net Sales and Recording Bad Debt...Ch. 6 - Finding Financial Information Refer to the...Ch. 6 - Refer to the financial statements of Express, Inc....Ch. 6 - Refer to the financial statements of American...Ch. 6 - Prob. 4CPCh. 6 - Prob. 5CP
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Accounts Receivable and Accounts Payable; Author: The Finance Storyteller;https://www.youtube.com/watch?v=x_aUWbQa878;License: Standard Youtube License