5.4 In 2004, Diletta & Co had the following:

• net sales: EUR 500,000

• cash discounts on sales: EUR 40,000

• sales returns and allowances: EUR 50,000.

(a) Prepare the revenue section of the 2004 income statement;

(b) Using the accounting equation, prepare an analysis for:

i) the revenue recognition of 2004 sales ii) sales returns and allowances iii) collection of trade receivables. Assume that all sales were on credit and all trade receivables for the 2004 sales were collected in 2004.