Use the data presented in P7- 2, which was selected from the records of Tunga Company for the year ended December 31, 2015.
In Problem
a. Sold merchandise for cash, $ 234,000.
b. Sold merchandise to R. Agostino on open account for $ 11,500.
c. Sold merchandise to K. Black on open account for $ 25,000.
d. Two days after purchase, R. Agostino returned one of the units purchased in (b) and received account credit.
e. Sold merchandise to B. Assaf on open account for $ 26,000.
f. R. Agostino paid his account in full within the discount period.
g. Collected $ 98,000 cash from customers for credit sales made in 2015, all within the discount periods.
h. K. Black paid the invoice in (c) within the discount period.
i. Sold merchandise to R. Fong on open account for $ 17,500.
j. Three days after paying the account in full,
K. Black returned seven defective units and received a cash refund.
k. Collected $ 6,000 cash on a trade receivable for sales made in 2014. The amount was received after the discount period.
l. Wrote off an old account of $ 3,000 after deciding that the amount would never be collected.
m. The company estimates that 4 percent of the trade receivables at December 31, 2015, will be uncollectible in the future.
Required:
1. Prepare the journal entries for these transactions, including the write- off of the uncollectible account and the adjusting entry for estimated bad debts. Do not record the cost of sales. Show computations for each entry.
2. Show how the accounts related to the preceding sale and collection activities should be reported on the 2015 statement of earnings. (Treat sales discounts as a contra- revenue account.)