Question

On May 1, Mark sold merchandise on account to Bates for $50,000 terms 3/5, net 45. On May 4, Bates returns merchandise with a sales price of $2,000. On May 16, Mark receives payment from Bates for the balance due. Prepare journal entries to record the May transactions in Mark’s books.  

MAY 1 .

MAY 4 .

May 16 .

1. The two methods to estimate uncollectible accounts are-------------------------------------

and---------------------------------------------------------------

2. Accounts Receivable minus Allowance for Doubtful accounts is called ------------------------------------------------------------------

Answer 1

1) Journal entries to record the May transactions in Mark’s books is as follows:

Date	Account and Explanaton	Debit ($)	Credit ($)
May 1	Account Recevable	50,000
	Sales Revenue		50,000
	(Recorded the account receivable)
May 4	Sales Return and Allowance	2,000
	Account Recevable		2,000
	(Recorded the Sales Return and Allowance)
May 16	Cash ($50,000 - $2000)	48,000
	Account Receivable		48,000
	(Recorded the Account Recevable)

Note : Sales discount is not calculated because payment is receved after the discorunt perod that is a 5 days

2) The two methods to estimate uncollectible accounts are Allowance Method and Direct write off method.

3) Accounts Receivable minus Allowance for Doubtful accounts is called Net realizable value.