Applebee sells speakers with a 6 month manufacturer’s warranty. At the time of p
ID: 2343182 • Letter: A
Question
Applebee sells speakers with a 6 month manufacturer’s warranty. At the time of purchase, customers also have an opportunity to buy an extended 1 year warranty. In Year 1 Applebee sold $40,000 of speakers and $12,000 of extended warranties. All sales are credit sales and sales occurred evenly during the year. Applebee is a calendar year entity that records AJE’s and produces financial statements only at year-end.
Make a summary JE to record Year 1 sales.
Make the related AJE needed at the end of Year 1.
Please show all work for calculations. Thank you.
Explanation / Answer
Since the entity sales are even and they are preparing the financials at the end of the year so this is important that their P&L looks even also.
this means that every month should have same amount of sales as their sales are even.
So sales for the year is of $40000 this means if we divide $40,000 by 12 months we get 3333 as sales are even throughout the year.
Below JE are required to be passed at year end to show that sales are even
Jan
Customer A/C DR. 3333
To Sales Account CR. 3333
Feb
Customer A/C DR. 3333
To Sales Account CR. 3333
March
Customer A/C DR. 3333
To Sales Account CR. 3333
April
Customer A/C DR. 3333
To Sales Account CR. 3333
May
Customer A/C DR. 3333
To Sales Account CR. 3333
June
Customer A/C DR. 3333
To Sales Account CR. 3333
July
Customer A/C DR. 3333
To Sales Account CR. 3333
Aug
Customer A/C DR. 3333
To Sales Account CR. 3333
Sept
Customer A/C DR. 3333
To Sales Account CR. 3333
October
Customer A/C DR. 3333
To Sales Account CR. 3333
November
Customer A/C DR. 3333
To Sales Account CR. 3333
December
Customer A/C DR. 3333
To Sales Account CR. 3333
Since they have $12,000 in sale of warranties also, below Je's should also be passed.
Jan
Customer A/C DR. 1000
To Sales Account CR. 1000
Feb
Customer A/C DR. 1000
To Sales Account CR. 1000
March
Customer A/C DR. 1000
To Sales Account CR. 1000
April
Customer A/C DR. 1000
To Sales Account CR. 1000
May
Customer A/C DR. 1000
To Sales Account CR. 1000
June
Customer A/C DR. 1000
To Sales Account CR. 1000
July
Customer A/C DR. 1000
To Sales Account CR. 1000
Aug
Customer A/C DR. 1000
To Sales Account CR. 1000
Sept
Customer A/C DR. 1000
To Sales Account CR. 1000
October
Customer A/C DR. 1000
To Sales Account CR. 1000
November
Customer A/C DR. 1000
To Sales Account CR. 1000
December
Customer A/C DR. 1000
To Sales Account CR. 1000
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