Question

In: Accounting

Valuation of accounts receivables with discounts and returns HEB Inc. has $200,000 of credit sales Terms...

Valuation of accounts receivables with discounts and returns

HEB Inc. has $200,000 of credit sales

Terms of sale – 2/10, n/40

Journal entries:

Net Method

Dr.

Cr.

Money received during discount period

Dr.

Cr.

Money received after discount period

Dr.

Cr.

Gross Method

Dr.

Cr.

Money received during discount period

Dr.

Cr.

Money received after discount period

Dr.

Cr.

Expert Solution

Gross Method

Debtor/ Account rec. A/c Dr. $200000

To Credit sales A/c $200000

(Credit sales made)

Money received during discount period

Cash A/c Dr. $196000

Discount Allowed A/c Dr. $ 4000

To Account recievable A/c $200000

(Money recieved from debtor)

Money recieved after discount period

Cash A/c Dr. $200000

To Debtor A/c $200000

(Cash realised on sales)

Net Method

Accounts rec. A/c Dr. $196000

To credit sales A/c $196000

(Credit sales made)

Money received during discount period

Cash A/c Dr. $196000

To Debtors A/c $196000

(Cash realised from debtor)

Money received after discount period

Cash A/c Dr. $200000

To Discount reversed (income) A/c $4000

To account rec. A/c $196000

(Amount realised after discount period)

ekkarill92 answered 1 year ago

E6-3 (Algo) Reporting Net Sales with Credit Sales, Sales Discounts, Sales Returns, and Credit Card Sales...

E6-3 (Algo) Reporting Net Sales with Credit Sales, Sales Discounts, Sales Returns, and Credit Card Sales The following transactions were selected from among those completed by Bennett Retailers in November and December: Nov. 20 Sold 20 items of merchandise to Customer B at an invoice price of $6,000 (total); terms 3/10, n/30. Nov. 25 Sold two items of merchandise to Customer C, who charged the $400 (total) sales price on her Visa credit card. Visa charges Bennett Retailers a 3...

Griffin Shoe Company records Sales Returns and Allowances, Sales Discounts, and Credit Card Discounts as contra-revenues....

Griffin Shoe Company records Sales Returns and Allowances, Sales Discounts, and Credit Card Discounts as contra-revenues. July 12 Sold merchandise to customer at factory store who charged the $300 purchase on her American Express card. American Express charges a 2 percent credit card fee. Cost of goods sold was $175. July 15 Sold merchandise to Customer T at an invoice price of $5,400; terms 1/10, n/30. Cost of goods sold was $2,700. July 20 Collected cash due from Customer T....

RECEIVABLES INVESTMENT Leyton Lumber Company has sales of $12 million per year, all on credit terms...

RECEIVABLES INVESTMENT Leyton Lumber Company has sales of $12 million per year, all on credit terms calling for payment within 30 days, and its accounts receivable are $2.4 million. Assume 365 days in year for your calculations. What is Leyton's DSO? Round your answer to two decimal places. days What would DSO be if all customers paid on time? Round your answer to two decimal places. days How much capital would be released if Leyton could take actions that led...

MDM Inc. is considering factoring its receivables. The firm has credit sales of $550 comma 000...

MDM Inc. is considering factoring its receivables. The firm has credit sales of $550 comma 000 per month and has an average receivables balance of $1 comma 100 comma 000 with 60-day credit terms. The factor has offered to extend credit equal to 89 percent of the receivables factored less interest on the loan at a rate of 1.6 percent per month. The 11 percent difference in the advance and the face value of all receivables factored consists of a...

1. What is your assessment for receivables in terms of credit quality?

1. What is your assessment for receivables in terms of credit quality? In other words, how did Office Smart increase its market share—possibly by lowering credit standards? Would it be prudent to ask for detailed data on receivables for at least for the top 10 customers?2. Can office smart do an annual cleanup? If not, if you price the credit as a working capital loan, do you underprice the loan? If the loan is not seasonal, what is it?3. Do...

Park Tires had sales of $412,980; Sales discounts totaled $2,120; and sales returns /allowances of $975.

Park Tires had sales of $412,980; Sales discounts totaled $2,120; and sales returns /allowances of $975.The company made purchases of $230,345; received discounts of $2,345; returned $780 in merchandise. He also paid $1,890 in transportation costs, FOB shipping point. John's beginning inventory was $324,094; and his ending inventory amounted to $310,258.Calculate and state each of the following: Net sales........................................................................................... Cost of Goods Available for Sale...................................................... Cost of Goods Sold............................................................................ Gross profit .......................................................................................

Aurora Corporation has annual credit sales of $1,200,000 with credit terms of 45 days and an...

Aurora Corporation has annual credit sales of $1,200,000 with credit terms of 45 days and an average collection period of 40 days with no discount. In the current economy Aurora has fallen upon tough times and is looking for ways improve cash flow, so the company is considering a changing their collection policy to 1/10 net 30. They estimate 50% of customers will take advantage of the discount and the average collection period will be 28 days. With the change...

Provide calculations and show steps for each: Average Collection Period Average Accounts Receivables/Net Credit Sales 2018...

Provide calculations and show steps for each: Average Collection Period Average Accounts Receivables/Net Credit Sales 2018 = 11,721/79,040 = 2019 = 12,046/90,621 = Total Asset turnover Net Sales/Average Total Assets 2018 = 90,621/118,007 = 2019 = 79,040/124,193 = Debt Ratio Total Debt/Total Assets 2018 = 53,521/111,820 = 2019 = 51,871/124,193 = Times interest earned EBIT/Total Interest 2018 = -2,926/-2,353 = 2019 = -2,181/-2,170 =

QUESTION 1 When the net price method is used to record credit sales, the sales discounts...

QUESTION 1 When the net price method is used to record credit sales, the sales discounts not taken account is reported as a(n) addition to sales returns and allowances on the income statement deduction from gross sales on the income statement deduction from selling expenses on the income statement addition to other revenue on the income statement QUESTION 2 After the company completes the bank reconciliation, it makes journal entries for adjustments it made to the bank statement balance it...

Accounts Receivable Turnover and Days' Sales in Receivables Quasar, Inc. sells clothing, accessories, and personal care...

Accounts Receivable Turnover and Days' Sales in Receivables Quasar, Inc. sells clothing, accessories, and personal care products for men and women through its retail stores. Quasar reported the following data for two recent years: Year 2 Year 1 Sales $3,798,190 $3,843,450 Accounts receivable 321,200 306,600 Assume that accounts receivable were $350,400 at the beginning of Year 1. a. Compute the accounts receivable turnover for Year 2 and Year 1. Round to one decimal place. Year 2: Year 1: b. Compute...