Question

Kelly's Jewelry has the following transactions during the year, total jewelry sales = $720,000; sales discounts = $18,500; sales returns $47,000; sales allowances = $27,000. In addition, at the end of the year the company estimates the following transactions associated with jewelry sales in the current year will occur next year: sales discounts = $1,850; sales returns = $5,640; sales allowances = $3,600, Compute net sales. Total sales Not sales

Answer 1

Total sales den sales discounts ($18500+ $1850) den sales returns Len: Salu allowances ($ 27,000+ $ 3600) $7,20,000 ($20350) ($ 47000) ($30600) $ 6,2 2,050 Net sales us the We have to follow acounting matching principle awording to which all the expenses should be readed same period in which the revenue is recognised о Except for sales return which is recorded in the period in which they att actually owned all other expenses like sales discounts & allowances will be added in wrrent year's expenses Journal entry Do ($) CoC$) $2695 $2695 Bad debts expense Allowance for doubtful debts ( To ruord bad debts expenne) workings: $3225 Estimated balance of а allowance for uncollectibles ($21,500 x 15%) Add: Balance in Allowance for uncollectible amount (co) ($530) Total bad debts to be rewrded $2695