Question

Outdoor Expo provides guided fishing tours. The company charges $290 per person but offers a 10% discount to parties of four or more. Consider the following transactions during the month of May.

May   2   Charlene books a fishing tour with Outdoor Expo for herself and four friends at the group discount price ($1,305 = $261 × 5). The tour is scheduled for May 7.
May   7   The fishing tour occurs. Outdoor Expo asks that payment be made within 30 days of the tour and offers a 5% discount for payment within 15 days.
May   9   Charlene is upset that no one caught a single fish and asks management for a discount. Outdoor Expo has a strict policy of no discounts related to number of fish caught.
May 15   Upon deeper investigation, management of Outdoor Expo discovers that Charlene’s tour was led by a new guide who did not take the group to some of the better fishing spots. In concession, management offers a sales allowance of 40% of the amount due.
May 20   Charlene pays for the tour after deducting the sales allowance.

Required:

Q.1. Record the necessary transaction(s) for Outdoor Expo on each date. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to 2 decimal places.)

Q.2. Show how Outdoor Expo would present net revenues in its income statement. (Round your answers to 2 decimal places.)

(PLEASE HELP I REALLY DONT UNDERSTAND THIS!)

Answer 1

• All working forms part of the answer
• Question 1

Date	Accounts title	Debit	Credit
02-May	[No entry required to record 'booking of tour']
07-May	Accounts receivables	$                                     1,305.00
	Sales Revenue		$                     1,305.00
	(Tour occurred and revenue recorded)
09-May	[No entry required]
15-May	Sales Allowance [1305 x 40%]	$                                         522.00
	Accounts receivables		$                        522.00
	(Allowance recorded)
20-May	Cash	$                                         743.85
	Sales Discount [ 783 x 5%]	$                                           39.15
	Accounts receivables [ 1305 - 522]		$                        783.00
	(Cash amount due now received within discount period)

• Question 2

Sales Revenue		$                     1,305.00
Less: Sales Return & Allowances	$                                         522.00
Less: Sales Discount	$                                           39.15	$                        561.15
Net Revenue		$                        743.85