Ch05a - Chapter 05 - Receivables and Sales E5-2 Merry...

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Chapter 05 - Receivables and Sales 5-1 E5-2 Merry Maidens Cleaning generally charges $200 for a detailed cleaning of a normal- size home. However, to generate additional business, Merry Maidens is offering a new- customer discount of 10%. On May 1, Ms. E. Pearson has Merry Maidens clean her house and pays cash equal to the discounted price. Required: Record the revenue earned by Merry Maidens Cleaning on May 1. May 1 Debit Credit Cash 180 Service Revenue 180 ( Provide services of $200 with a 10% trade discount ) E5-3 On March 12, Medical Waste Services provides services on account to Grace Hospital for $10,000, terms 3/10, n/30. Grace pays for those services on March 20. Required: For Medical Waste Services, record the service on account on March 12 and the collection of cash on March 20. March 12 Debit Credit Accounts Receivable 10,000 Service Revenue 10,000 ( Provide services on account ) March 20 Cash 9,700 Sales Discounts 300 Accounts Receivable 10,000 ( Receive cash on account less a 3% sales discount) ( Sales discount = $10,000 x 3% )
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Chapter 05 - Receivables and Sales 5-2 E5-6 On April 25, Foreman Electric installs wiring in a new home for $2,500 on account. However, on April 27, Foreman's electrical work does not pass inspection, and Foreman 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. Requirement 1: Record the credit sale on April 25. April 25 Debit Credit Accounts Receivable 2,500 Service Revenue 2,500 ( Provide services on account ) Requirement 2: Record the sales allowance on April 27. April 27 Debit Credit Sales Allowances 500 Accounts Receivable 500 ( Record sales allowance for credit sale ) Requirement 3: Record the cash collection on April 30. April 30 Debit Credit Cash 2,000 Accounts Receivable 2,000 ( Collect cash on account less sales allowance ) Requirement 4: Calculate net sales associated with these transactions. Service revenue $2,500 Less: Sales allowances (500) Net sales $2,000
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Chapter 05 - Receivables and Sales 5-3 Problem 5-3A Requirement 1: Record transactions for each date. June 12, 2012 Debit Credit Accounts Receivable 35,000 Service Revenue 35,000 ( Provide services on account ) September 17, 2012 Cash 20,000 Accounts Receivable 20,000 ( Receive cash on account ) December 31, 2012 Bad Debt Expense 6,000 Allowance for Uncollectible Accounts 6,000 ( Estimate future bad debts ) ( $15,000 x 40% = $6,000 )
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This note was uploaded on 02/23/2012 for the course MGMT 200 taught by Professor Greigg during the Summer '08 term at Purdue University-West Lafayette.

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Ch05a - Chapter 05 - Receivables and Sales E5-2 Merry...

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