Ch 5 In Class Problems SOLUTIONS.ppt

# Ch 5 In Class Problems SOLUTIONS.ppt - Exercise 5-2...

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Johnson’s Cleaning generally charges \$100 for a detailed cleaning of a normal-size home. However, to generate additional business, Johnson is offering a new customer discount of 10%. On May 1, Ms. F. Robinson uses the services of the company to clean her house and pays cash equal to the discounted price. Required: Record the revenue earned by Johnson Cleaning on May 1. Record cash sales with a trade discount Exercise 5-2

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Debit Credit Cash 90 Service Revenue (Provide services of \$100 with a 10% trade discount) 90 May 1 Calculation of discounted price Regular listed price \$100 Less: Trade discount (100 × 10%) (10) Discounted price \$ 90
On April 25, Lobo Electric installs wiring in a new home for \$3,000 on account. However, on April 27, Lobo’s electrical work does not pass inspection, and Lobo grants the customer an allowance of \$500 because of the problem. The customer makes full payment of the balance owed, excluding the allowance, on April 30. Required: 1.Record the credit sale on April 25. 2.Record the sales allowance on April 27. 3.Record the cash collection on April 30. 4.Calculate net sales associated with these transactions. Record credit sales with a sales allowance Exercise 5-6

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Debit Credit Accounts Receivable 3,000 Service Revenue (Provide services on account) 3,000 April 25 Lobo Electric installs wiring in a new home on account \$3,000 Lobo grants the customer an allowance \$500 April 25 April 30
• Fall '17
• Revenue, Uncollectible Accounts

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