Intermediate Accounting I
Saturn Company made sales of $25,000 with terms of 1/10, n/30.
Within the discount period it
received payment from customers owing $15,000; after the discount period it received payment
from customers owing $10,000.
Prepare journal entries for the transactions described above assuming Saturn uses the
gross method of recording sales.
Prepare journal entries for the transactions described above assuming Saturn uses the net
method of recording sales.
The Lambert Corporation sells merchandise at a list price of $60,000 with accompanying terms
2/10, n/30 on December 8, 2005.
By December 18, 2005, Lambert had collected from customers
for merchandise originally billed at $34,000.
By December 31, 2005 (Lambert’s FYE),
additional collections had been received on sales originally billed at $18,000 and sales returns
and allowances of $1,500 had been granted by Lambert.
By January 15, 2006, all remaining
balances due had been collected.
Assume a 12/31 fiscal year end.
Prepare the journal entries using (a) the gross method and (b) the net method to record all
the items above.
Calculate the accounts receivable balance that would be reported under the (a) gross
method and (b) net method on the Lambert Corp.’s December 31, 2005 balance sheet.
Accounts Receivable and Bad Debt Expense
Tiger Tank, Inc. had net sales in 2005 of $1,200,000.
At year-end, the balance in Accounts
Receivable was $250,000 (debit balance), and the balance in the Allowance for Doubtful
Accounts is $2,100 (credit balance).
Calculate bad debt expense and record the journal entry
necessary under each of the following scenarios:
Tiger Tank estimates that 2% of net sales are uncollectible
Tiger Tank estimates that 10% of accounts receivable are uncollectible
Based on an accounts receivable aging schedule, Tiger Tank estimates that total
uncollectible accounts receivable are $24,600.