Question

LU Stributors. ne soon as it delivers its products 1062.6-4 APG-2 Reporting Net Sales and Expenses with Discount Ieturns, and Bad Debts- The following data were selected from the records of Fluwars Company for the year ended December 31, 2017: Balances at January 1, 2017: Accounts receivable (various customers) $116,000 Allowance for doubtful accounts 5.200 The company sold merchandise for eash and on open account with credit terms 1/10, 1/30. Assume a unit sales price of $400 in all transactions and use the cross method to record sales revenue. The following transactions occurred during 2017 a. Sold merchandise for cash, $228,000. b. Sold merchandise to Abbey Corp: invoice amount, $12,000. c. Sold merchandise to Brown Company: invoice amount. $23,600. d. Abbey paid the invoice in (b) within the discount period. e Sold merchandise to Cavendish Inc., invoice amount, $26,000. S. Two days after paying the account in full, Abbey returned four defective units and received a cash refund. g. Collected $89,100 cash from customers for credit sales made in 2017, all within the discount periods. 1. Three days after the purchase date, Brown returned three of the units purchased in (c) and received account credit. i. Brown paid its account in full within the discount period. j. Sold merchandise to Decca Corporation; invoice amount, $18,400. k. Cavendish paid its account in full after the discount period. Wrote off an old account of $2,400 after deciding that the amount would never be collected m. The estimated bad debt rate used by the company was 5 percent of accounts receivable at December 31, 2017

Answer 1

1)
	Sales Revenue	Sales Discounts (taken)	Sales Returns and Allowances	Bad debt expense
(a)	228000	N	N	N
b)	12000	N	N	N
c)	23600	N	N	N
d)	N	120	N	N
e)	26000	N	N	N
f)	N	-16	1600	N
g)	N	900	N	N
h)	N	N	1200	N
i)	N	236	N	N
j)	18400	N	N	N
k)	N	N	N	N
l)	N	N	N	N
m)*	N	N	N	3860
Credit sales (12000+23600+26000-18400)	80000
Less: Sales returns ($1,600 + $1200)	2800
Net sales revenue	77200
Estimated bad debt rate	5%
Bad debt expense	3860

1 1) Bad debt expense N N N N 2 3 (a) 4 b) 5 C) 6 d) 7 e) 8 f) 9 g) 10 h) 11 i) 12 ) 13 k) 14 0) 15 m) Sales Returns and Sales Revenue Sales Discounts (taken) Allowances 228000 12000 N N 23600 N N =B4*1% N 26000 =-4*400*1% =4400 N =89100/(1-1%)*1% N N =3400 N =B51% N 18400 N N NN N NN NNN N N N N N N N N N N N N N =((B4+B5+B7+B12)-(D8+010))*5% 16 17 Credit sales (12000+23600+26000-18400) 18 Less: Sales returns ($1,600 + $1200) 19 Net sales revenue 20 Estimated bad debt rate 21 Bad debt expense =B4+B5+B7+B12 =D8+D10 =B17-B18 0.05 =B19.5%