Question

Splish Brothers Trading uses a perpetual inventory system and the earnings approach to recognize revenue. The company offers credit terms to select customer. The following are transactions of Splish Brothers Trading with some of its customers.

Feb. 5		Sold merchandise to Classen for $46,000, terms 1/10, n/60.
6		Classen returned $5,200 of merchandise.
11		Wrote off an account receivable from B. Wong of $1,600, after making repeated efforts to collect.
15		Classen paid Splish Brothers the amount owing.
28		Collected $890 from a collection agency who managed to collect an account from Mancini that had been previously written off by Splish Brothers.

Prepare the journal entries to record the above transactions. Ignore any inventory or cost of goods sold entries for the purposes of this question.

Answer 1

Date	Account Titles	Debit	Credit
Feb-05	Accounts Receivable-Classen	$         46,000
	Sales Revenue		$         46,000
Feb-06	Sales Returns and Allowances	$           5,200
	Accounts Receivable-Classen		$           5,200
Feb-11	Allowance for Doubtful Accounts	$           1,600
	Accounts Receivable-B.Wong		$           1,600
Feb-15	Cash	$         40,392
	Sales Discount	$              408
	Accounts Receivable-Classen		$         40,800
Feb-28	Accounts Receivable-Mancini	$              890
	Allowance for Doubtful Accounts		$               890
Feb-28	Cash	$              890
	Accounts Receivable-Mancini		$               890