ACC 311 Quiz 5 - ACC 311 Quiz #5 10/14/2010 Name: Class...

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ACC 311 Name: KEY 9:30 and 11:00 Quiz #5 10/14/2010 Class Time: 1. Wacky Wacky Stores sold $950,000 in merchandise during 2005. $300,000 of which was on credit with terms2/10, n/30 (75 percent of these were paid within the discount period); $500,000 was paid with credit cards (there was a 3% credit card discount), and the rest were paid in cash. On December 31, 2005 the accounts receivable balance was $80,000. Answer the following questions: a. Compute net sales for 2005 , assuming that sales and credit card discounts are treated as contra-revenue accounts) Sales revenue 950,000 (2 points0 Less: Sales discount (75%300,000*2%) (4,500) (2 points) Credit card discount (3%500,000) (15,000 ) (2 points) Net sales 930,500 b. Assuming that Wacky Wacky uses the percentage of sales method for estimating bad debt expense and that it estimates that 6% of credit sales will produce bad debts. Record bad debt expense for 2005. Bad debt expense = 3% 300,000 =9,000
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ACC 311 Quiz 5 - ACC 311 Quiz #5 10/14/2010 Name: Class...

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