Reference no: EM132836359
Question - Complete the accounts receivable process, including analyzing sales transactions, invoicing, processing sales orders, returns, and allowances, and preparing a schedule of accounts receivable.
Q1. Chip works in the Accounts Receivable department at Furniture Direct, a wholesale furniture supplier. Furniture Direct's largest customer is Burkhalter Interiors, an upscale national chain, whose account carried a balance of $15,780,000 at the beginning of September. On September 19, Burkhalter Interiors places a very large order for $3,600,000 in upholstered items from Furniture Direct's new Amelia line. Chip is now ready to analyze this transaction. He assembles the materials he needs, including the sales slip (number 009534). After he has recorded this transaction, he will need to send Burkhalter Interiors an invoice for their purchase.
As you go through the accounts receivable process, pay close attention to detail and double-check your work to make sure it is accurate.
a. What accounts will Chip debit and credit in this transaction, and by how much? Fill out the following customer file for Burkhalter Interiors.
b. How will Chip post this transaction to the Accounts Receivable subsidiary ledger? Fill out the following table to demonstrate.
c. What information should Chip include on the invoice that he sends to Burkhalter Interiors? Fill out the following invoice.
Q2. On September 30, Furniture Direct receives a payment from Burkhalter Interiors, in check form (#6732) for $5,500,000. On the same day, Burkhalter Interiors reports three of the sofas in the order as damaged and returns them to Furniture Direct. The wholesale price of each sofa is $2,300.
a. How should this payment be processed, and how should Chip update the customer file? Update the customer file below.
b. How should Chip record the refund for the returned merchandise? Update the customer file below.
Q3. Now that Chip has gone through the transactions with Burkhalter Interiors, he wants to make a schedule of accounts receivable. In addition to Burkhalter Interiors, Furniture Direct sells to Fine Living, Davidson Home Interior, and Joe's Living Room. Fine Living has purchased $50,000 in wooden tables and chairs and paid the account in full. Davidson Home Interior's account had a balance of $1,000,000 on September 1, and they sent a payment for $250,000 on September 15. Joe's Living Room's account has a balance of $40,000 on September 1 and they have not sent payment as of September 30.
a. Make a schedule of accounts receivable for all of Furniture Direct's accounts. Fill out the table below.
b. After several months of phone calls and attempts to collect payment from Joe's Living Room, Chip learns on November 19 that the company has gone out of business. This means that the $40,000 account balance that the company has will not be paid at all. To finish this posting transaction, complete the customer file below.