Question

Chapter 5 Homework Submit your answers in CANVAS before it is due Use the following to answer questions 1-5 For the next few weeks CUM Ad Agency is offering a 20% trade discount when providing advertising services of $50.000 or more to its customers to encourage customers to buy more advertising, The Agency also offers 2/15, n30 on all credit sales. All credit sales are invoiced at the end of the month. The Agency provided the following services this month; amounts are shown before trade discounts have been deducted: • Designs a $30,000 ad campaign for Customer A-on account-pays within 15 days • Designs a $50,000 ad campaign for Customer B- on account - pays within 15 days Designs a $50,000 ad campaign for Customer C-on account-pays within 30 days • Designs a $20,000 ad campaign for Customer D-received payment last month What amount of Service revenue should the Agency record for Customer A? What amount of Service revenue should the Agency record for Customer B? 1. $ 2. $ 3. S 4. S 5. $_ Customer B pays within 15 days, how much will they pay? Determine the monthly Service revenue for the Agency Determine the Agency's Net service revenue for the month

Answer 1

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CJM Ad Agency
Answer 1
Invoice value is less than $ 50,000 so 20% trade discount not applicable. So revenue to be recorded will be $ 30,000.
Answer 2
Invoice value is $ 50,000 so 20% trade discount is applicable. So revenue to be recorded will be:	Amount $
Revenue	50,000.00
Trade Discount 20%	10,000.00
Revenue to be recorded	40,000.00
Answer 3
Customer B paid in 15 days so 2% cash discount will be allowed. So amount paid by them:	Amount $
Revenue to be recorded	40,000.00
Discount 2%	800.00
Amount paid by Customer B	39,200.00
Workings for Answer 4
Invoice value for Customer C is $ 50,000 so 20% trade discount is applicable. So revenue to be recorded will be:	Amount $
Revenue	50,000.00
Trade Discount 20%	10,000.00
Revenue to be recorded	40,000.00
No cash discount is applicable as it has paid after 15 days.
Answer 4	Amount $
Customer A	30,000.00
Customer B	40,000.00
Customer C	40,000.00
Customer D	20,000.00
Monthly service revenue	130,000.00
Workings for Answer 5	Amount $
Invoice value for Customer A	30,000.00
Discount 2%	600.00
Net Revenue from Customer A	29,400.00
Answer 5	Amount $
Net Revenue from Customer A	29,400.00
Net Revenue from Customer B	39,200.00
Customer C	40,000.00
Customer D	20,000.00
Net service revenue	128,600.00