On April 5, Smith & Co. sold $25,000 of inventory on credit with the terms 2/15,...

 

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On April 5, Smith & Co. sold $25,000 of inventory on credit with the terms 2/15, n/45. They received a payment of $15,000 on April 10, and the remaining balance of $10,000 was settled on May 2. Required: Assuming Smith & Co. uses the gross method accounting for sales discounts, prepare the entry to be recorded on April 10 and May 2. Part II: Suppose Jackson Enterprises estimates that around 3% of its $2 million in accounts receivable outstanding will be returned. Currently, there's no balance in the Allowance for Sales Returns and Allowances account. Required: a) Prepare the entry to show expected sales returns and allowances. b) Explain why it is important to prepare and include this entry in Jackson Enterprises' financial statements. Part III: A trial balance before adjustment included the following: Accounts receivable........... Allowance for doubtful accounts.... Sales................... Sales returns and allowances.... Debit $120,000 Credit 730 $510,000 8,000 Required: Give journal entries assuming that the estimate of uncollectibles is determined by taking 5% of gross accounts receivable, On April 5, Smith & Co. sold $25,000 of inventory on credit with the terms 2/15, n/45. They received a payment of $15,000 on April 10, and the remaining balance of $10,000 was settled on May 2. Required: Assuming Smith & Co. uses the gross method accounting for sales discounts, prepare the entry to be recorded on April 10 and May 2. Part II: Suppose Jackson Enterprises estimates that around 3% of its $2 million in accounts receivable outstanding will be returned. Currently, there's no balance in the Allowance for Sales Returns and Allowances account. Required: a) Prepare the entry to show expected sales returns and allowances. b) Explain why it is important to prepare and include this entry in Jackson Enterprises' financial statements. Part III: A trial balance before adjustment included the following: Accounts receivable........... Allowance for doubtful accounts.... Sales................... Sales returns and allowances.... Debit $120,000 Credit 730 $510,000 8,000 Required: Give journal entries assuming that the estimate of uncollectibles is determined by taking 5% of gross accounts receivable,

Answer rating: 100% (QA)

Part I 1 Entry on April 10 Debit Accounts Receivable 15000 Credit Sales Revenue 15000 2 Entry on May ... View the full answer