Question

6.

Oswego Clay Pipe Company sold $46,200 of pipe to Southeast Water District #45 on April 12 of the current year with terms 1/15, n/60. Oswego uses the gross method of accounting for cash discounts.

What entry would Oswego make on April 12?

Multiple Choice

Accounts receivable	46,200
Sales		45,738
Sales discounts		462

Accounts receivable	45,738
Sales		45,738

Accounts receivable	46,200
Sales		46,200

Accounts receivable	45,738
Sales discounts	462
Sales		46,200

7.

Oswego Clay Pipe Company sold $46,300 of pipe to Southeast Water District #45 on April 12 of the current year with terms 3/15, n/60. Oswego uses the gross method of accounting for cash discounts.

What entry would Oswego make on April 23, assuming the customer made the correct payment on that date?

Multiple Choice

Cash	46,300
Accounts receivable		44,911
Sales		1,389

Cash	44,911
Sales discounts	1,389
Accounts receivable		46,300

Cash	44,911
Sales	1,389
Accounts receivable		46,300

Cash	46,300
Sales discounts	1,389
Accounts receivable		46,300
Sales discounts forfeited		1,389

8.

Oswego Clay Pipe Company sold $45,900 of pipe to Southeast Water District #45 on April 12 of the current year with terms 1/15, n/60. Oswego uses the gross method of accounting for cash discounts.

What entry would Oswego make on June 10, assuming the customer made the correct payment on that date?

Multiple Choice

Cash	45,900
Accounts receivable		45,441
Sales discounts forfeited		459

Cash	46,359
Accounts receivable		45,900
Sales discounts forfeited		459

Cash	45,900
Accounts receivable		45,441
Discounts receivable		459

Cash	45,900
Accounts receivable		45,900

9.

False Value Hardware began 2018 with a credit balance of $31,500 in the allowance for sales returns account. Sales and cash collections from customers during the year were $620,000 and $580,000, respectively. False Value estimates that 5% of all sales will be returned. During 2018, customers returned merchandise for credit of $24,000 to their accounts.

False Value Hardware's 2018 income statement would report net sales of:

Multiple Choice

a. $589,000.

b. $596,000.

c. $588,500.

d. $612,500.

10.

Chez Fred Bakery estimates the allowance for uncollectible accounts at 3% of the ending balance of accounts receivable. During 2018, Chez Fred's credit sales and collections were $116,000 and $136,000, respectively. What was the balance of accounts receivable on January 1, 2018, if $130 in accounts receivable were written off during 2018 and if the allowance account had a balance of $540 on December 31, 2018?

Multiple Choice

a. $36,000.

b. $730.

c. $38,130.

d. None of these answer choices are correct.

Answer 1

6) Journal Entry :-

Particulars	Debit($)	Credit($)
Accounts Receivable A/c Dr.	46200
To Sales A/c		46200
(To Record Credit Sales on April 12)

7) Journal Entry :-

Particulars	Debit($)	Credit($)
Cash A/c Dr.	44911
Sales Discount A/c	1389
To Accounts Receivable A/c		46300
(To Record Cash Collected from Customer and give sales discount. Because, Customer Payment within 15 days from sale)

8) Journal Entry :-

Particulars	Debit($)	Credit($)
Cash A/c Dr.	45900
To Accounts Receivable A/c		45900
(To Record Cash Collection on June 10)

Note :- Discount not given. Because, Customer Payment After 15 days from Sales

9) Net Sales = Sales - Merchandise returned by customers

= $620000 - $24000

= $596000

The Answer is "B".

10) Allowance for uncollectible Amount = 3% * Ending Balance of Accounts Receivable

Ending Balance of Accounts Receivable = Allowance for uncollectible amount / 3%

= $540 / 3%

= $18000

Beginning Balance of Accounts Receivable:-

= Ending Balance of Accounts Receivable + Write-off Amount + Cash Collection - Credit Sales

= $18000 + $130 + $136000 - $116000

= $38130

The answer is "C"

C. $38130

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