Financial Accounting (12th Edition) (What's New in Accounting)
12th Edition
ISBN: 9780134725987
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
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Textbook Question
Chapter 5, Problem 5.62AP
(Learning Objectives 1, 2, 3, 4, 5: Apply GAAP for proper revenue recognition; account for sales allowances; account for sales discounts; account for accounts receivable; write off account; estimate uncollectible account expense)
Bowerston Variety Store had the following balances as of November 1·
Accounts Receivable | $5,100 |
Allowance for Uncollectible Accounts | $360 |
The following selected transactions occurred at Bowerston Variety Store during the month of November:
November 3 | Sold $300 of merchandise to Martino’s Inc., which paid for the items in cash. The items cost Bowerston $120. |
November 5 | Sold $600 of merchandise to Liberry Co., which paid by credit card, The credit card company charges Bowerston a fee of 2% on credit card sales. Bowerston’s cost of this merchandise was $245. |
November 10 | Sold $1,300 of merchandise to Willow Creek on account, Terms were 2/10, net 30. Bowerston’s cost of this merchandise was $500. |
November 11 | Sold $2,000 of merchandise to Amherst Shapes on account. Terms were 2/10, net 30. Bowerston’s cost of this merchandise was $900. |
November 12 | Sold $900 of merchandise to Black Riser Inc., on account. Terms were 2/10, net 30. Bowerston’s cost of this merchandise was $387. |
November 18 | Willow Creek reported that some of the merchandise received was in a different color than ordered so it returned $150 of the merchandise. The cost to Bowerston was $58. |
November 20 | Amherst Shoppes pa id the balance of what it owed for the purchase on November 11. |
November 22 | Black River Inc., returned $200 of the merchandise for a refund. Bowerston’s cost of the returned merchandise was $86. |
November 22 | Black River Inc., paid the remaining balance owed for the purchase on November 12. |
November 23 | Sold $5,000 of merchandise to Charleston Co. on account. Terms were 2/10, net 30. Bowerston’s cost of this merchandise was $2,000. |
November 25 | Willow Creek paid the balance of what it owed for the purchase on November 10. |
November 26 | Discovered that Ema Enterprises, a customer owing $150 from a July transaction, declared bankruptey and there is no chance of collection. Wrote off the balance of Ema’s account. |
November 27 | Sold $700 of merchandise to Denis’s One-Stop-Shop on account. Terms were 2/10, net 30. Bowerston’s cost of this merchandise was $245. |
November 1-30 | Sales on account during the month of November for transactions not listed individually totaled $7,200, Cost of goods sold for these sales totaled $3,000. |
November 1-30 | Credit card sales on account during the month of November for transactions not listed individually totaled $2,500. The credit card company charges Bowerston a fee of 2% on credit card sales. Cost of goods sold for these sales totaled $900. |
November 1-30 | Cash collections on account during the month of November for transactions not listed individually totaled $4,500.(No discount were taken by these customer.) |
November 30 | Bowerston made the |
November 30 | Bowerston made an adjusting entry to estimate uncollectible account expense for the month of November. Bowerston estimates its uncollectible-account expense as 1% of total credit (on account) sales for the month. |
Requirements
1. Record Bowerston’s November transactions, including the cost of goods sold entries for each sale.
2. Calculate the net realizable value of accounts receivable as of November 30.
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Chapter 5 Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
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