Reference no: EM13492283
The following data were selected from the records of a company for the year ended December 31.
In the following order, except for cash sales, the company sold merchandise and made collections on credit terms 2/10, n/30, assuming a unit sales price of $500 in all transactions and use the gross method to record sales revenue.
(a) Sold merchandise for cash, $220,000.
(b) Sold merchandise to Company A, invoice price, $10,000
(c) Sold merchandise to Company B , invoice price, $25,000
(d) Company A paid the invoice in (b) within the discount period
(e) Sold merchandise to Company C, invoice price, $30,000
(f) Two days after paying the account in full, Company A returned one defective unit and received a cash refund
(g) Collected $78,400 cash from customer sales on credit in prior year, all within the discount periods
(h) Three days after purchased date, Company B returned three of the units purchased in (c) and received account credit
(i) Company B paid its account in full within the discount period
(j) Sold merchandise to Company D, invoice price $12,000
(k) Company C paid its account in full after the discount period
(l) Wrote off an account from a previous years account of $2,000 after deciding that the amount would never be collected
(m) The estimated bad debt rate used by the company was 3 percent of credit sales net of returns
Using the categories shown below, indicate the effect of each listed transaction, including the write-off of the uncollectible account and the adjusting entry for estimated bad debts, ignoring the cost of goods sold. Indicate the sign and amount of the effect or the use of "NE" to indicate "no effect." Use the following table as a guide.
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Sales Revenue
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Sales Discounts (taken)
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Sales Returns and Allowances
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Bad Debt Expense
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