Midvale Manufacturing, Incorporated, reported the following in 20X0 ($ in thousands): Sales .................................. $680 Cash discounts on

Question:

Midvale Manufacturing, Incorporated, reported the following in 20X0 ($ in thousands):

Sales .................................. $680

Cash discounts on sales .......20

1. Assume that Midvale uses the gross method of accounting for cash discounts.

a. Prepare the revenue section of the 20X0 income statement.

b. Prepare journal entries for the initial revenue recognition for 20X0 sales and the collection of accounts receivable. Assume that all sales were on credit and all accounts receivable for 20X0 sales were collected in 20X0. Omit explanations.

2. Assume that Midvale uses the net method of accounting for cash discounts.

a. Prepare the revenue section of the 20X0 income statement.

c. Suppose the customers passed up the $20,000 cash discounts and paid the full $680,000.

Prepare the journal entry for the collection of the accounts receivable.

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...