P6-2 Reporting Net Sales and Expenses with Discounts, Returns, and Bad Debts LO6
ID: 2489170 • Letter: P
Question
P6-2 Reporting Net Sales and Expenses with Discounts, Returns, and Bad Debts LO6-2, 6-3 The following information applies to the questions displayed below The following data were selected from the records of Sykes Company for the year ended December 31, 2014. Balances January 1, 2014 Accounts recelvable (various customers)115,000 Allowance for doubtful accounts 5,000 In the following order, except for cash sales, the company sold merchandise and made collections on credt terms 410, n/30 (assume a unit sales price of $800 In all transactions and use the gross method to record sales revenue). Transactions during 2014 a. Sold merchandise for cash, $258,000 b. Sold merchandise to R. Smith; invoice price, $8,500. c Sold merchandise to K. Miller: invoice price, $24,000 d. Two days after purchase date, R. Smith returned one of the units purchased in (b) and received eccount credit. e. Sold merchandise to B. Sears; Invoice price, $23,000. t R. Smith pald his account in full within the discount period. g. Collected $93,000 cash from customer sales on credit in prior year, all within the discount perlods h. K. Miller paid the invoice in (d within the discount period. L. Sold merchandise to R. Roy; Involce price, $20,500 J. Three deys after paying the account in full, K. Miller returned seven defective units and received a cash refund k. After the discount period, collected $6,000 cash on an account receivable on sales in a prior year L Wrote off a 2013 account of $4,000 after deciding that the amount would never be collected m. The estimated bad debt rate used by the company was 10 percent of credit sales net of returns ReferencesExplanation / Answer
(1)
(2) Sykes Company- Income Statement (Partial) :
Net Revenue ( Invoice value -less returns) = $327,824 Operating Expenses (7,276 + 1,268)= $ 8,544
Trans- action Sales Revenue ($) Sales Discount Taken ($) Sales ($) Return & Allowances Bad Debts exps. ($) Cash received ($) a 258,000 b 8,500 c 24,000 d 800 e 23,000 f 308 7,392 g 93,000 h 960 23,040 i 20,500 j 5376 -5,376 k 6,000 l 4000 m 3,276 Total 334,000 1268 6176 7,276 124,056Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.