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.
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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