Reference no: EM132793715

Question - Karen Company originated a receivable of Php 100,000 on December 25, 2018. It is accounting its sale under the gross method with a credit term of 2/10, /30. The entity, however estimates that only 50% cash discount will be availed by the customer. Sixty percent of the customer paid on January 4, 2019 and the balance was collected on January 31, 2019.

Make an relevant journal entries to record the sale, allowance for sales discount and cash discount availed by the customer under PAS 18 and PFRS 15.

On December 31, 2018 Karen Company sold goods costing Php 100,000 and with a sales price of Php 150,000 to Jaja Company on account. To induce the sale, Karen Company provides its buyer the right to return goods within 30 days upon purchase if the buyers are not satisfied with the goods. The company uses perpetual inventory system in recording its inventories.

Provide all the necessary entries under PAS 18 and PFRS 15 assuming:

Karen Company can reliably estimate that 30% of the goods sold will be returned within the agreed period of time. On January 5, 2019, 45% of the goods were actually returned and the balance of receivable was collected.

Karen Company cannot reliably estimate future returns. On February 1, 2019 the customer did not return any of the goods.