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ProBuilder has the following June 30 fiscal-year-end unadjusted balances: Allowance for Sales Discounts, $0; and Accounts...

ProBuilder has the following June 30 fiscal-year-end unadjusted balances: Allowance for Sales Discounts, $0; and Accounts Receivable, $11,600. Of the $11,600 of receivables, $2,800 are within a 3% discount period, meaning that it expects buyers to take $84 in future discounts arising from this period’s sales.

a. Prepare the June 30 fiscal-year-end adjusting journal entry for future sales discounts.

b. Assume the same facts above and that there is a $9 fiscal-year-end unadjusted credit balance in the Allowance for Sales Discounts. Prepare the June 30 fiscal-year-end adjusting journal entry for future sales discounts.

ProBuilder reports merchandise sales of $66,000 and cost of merchandise sales of $13,200 in its first year of operations ending June 30. It makes fiscal-year-end adjusting entries for estimated future returns and allowances equal to 4% of sales, or $2,640, and 4% of cost of sales, or $528.

a. & b. Prepare the June 30 fiscal-year-end adjusting journal entry for future returns and allowances related to sales and cost of sales.

Record the expected sales to be refunded. Record the expected cost of returns.

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Answer #1
Ans a Adjusting Journal entry
Date Account Title Dr $ Cr $
June 30. Sales Discount                           84
Allowance for Sales Discount                               84
Ans b. Adjusting Journal entry
Date Account Title Dr $ Cr $
June 30. Sales Discount                           75
Allowance for Sales Discount                               75
Ans a Second part
Date Account Title Dr $ Cr $
June 30. Sales Discount                     2,640
Allowance for Sales Discount                         2,640
Inventory -Allowance for return                        528
Cost of Sales -Allowance for return                             528
Ans b
Date Account Title Dr $ Cr $
June 30. Sales Discount                     2,631
Allowance for Sales Discount                         2,631
Inventory -Allowance for return                        528
Cost of Sales -Allowance for return                             528
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