On October 2, 2025, Wildhorse Company sold $6,340 of its elite camping gear (with a cost...

 

Transcribed Image Text:

On October 2, 2025, Wildhorse Company sold $6,340 of its elite camping gear (with a cost of $3,700) to Indigo Outfitters. As part of the sales agreement, Wildhorse includes a provision that if Indigo is dissatisfied with the product, Wildhorse will grant an allowance on the sales price or agree to take the product back (although returns are rare, given the long-term relationship between Wildhorse and Indigo). Indigo expects total allowances to Indigo to be $790. On October 16, 2025, Wildhorse grants an allowance of $420 to Indigo because the color for some of the items delivered was a bit different than what appeared in the catalog. (a) Prepare journal entries for Wildhorse to record (1) the sale on October 2, 2025, (2) the granting of the allowance on October 16, 2025, and, (3) any adjusting required on October 31, 2025 (when Wildhorse prepares financial statements). Wildhorse now estimates additional allowances of $230 will be granted to Indigo in the future. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) On October 2, 2025, Wildhorse Company sold $6,340 of its elite camping gear (with a cost of $3,700) to Indigo Outfitters. As part of the sales agreement, Wildhorse includes a provision that if Indigo is dissatisfied with the product, Wildhorse will grant an allowance on the sales price or agree to take the product back (although returns are rare, given the long-term relationship between Wildhorse and Indigo). Indigo expects total allowances to Indigo to be $790. On October 16, 2025, Wildhorse grants an allowance of $420 to Indigo because the color for some of the items delivered was a bit different than what appeared in the catalog. (a) Prepare journal entries for Wildhorse to record (1) the sale on October 2, 2025, (2) the granting of the allowance on October 16, 2025, and, (3) any adjusting required on October 31, 2025 (when Wildhorse prepares financial statements). Wildhorse now estimates additional allowances of $230 will be granted to Indigo in the future. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)

Answer rating: 100% (QA)

1 Journal entry for the sale on October 2 2025 Date October 2 2025 Accounts Receivable Indigo Outfit... View the full answer