E5-3A

er 31. Adjusting Journal Entries-Sales Returns and Ano w ances During the year, Reed Company sells merchandise on account totaling $2,000,000 (the cost to Reed for this merchandise was $800,000). Reed allows a 60-day return privilege for the merchandise it sells. At year-end, Reed estimates there remain $350,000 of sales (with a cost to Reed of S140,000) that are still within the 60-day return period. Based on past experience, Reed expects 5 percent of this merchandise to be returned. Prepare the period-end adjusting journal entries needed for Reed Com- pany to comply with the new revenue recognition standard. Reed's fiscal year-end is December 31. (App rei3. New RevenueRecognition Standard EXERCISES-SET A ES-1A. Cash Discount Calculations On June 1, Forest Company sold merchandise with a list price of LO3 S30,000. For each of the sales terms below, determine the proper amount of cash received: Date Paid June 8 June 15 June 14 June 28 Credit Terms I. 2/10, n/30 1/10, n/30 1/15, n/30 n/30 3. ES2A. Journal Entries for Sale, Return, and Remittance--Perpetual System On September 13, Brady Lo3 Company sold merchandise with an invoice price of $1,100 (S600 cost), with terms of 2/10, n/30, to Dalton Company. On September 17, $250 of the merchandise (5100 cost) was was the wrong model. On September 23, Brady Company received a check for the amount due from Dalton Company returned because it Required Prepare the journal entries made by Brady Company for these transactions. Brady uses the perpetual inventory system. ES3A. Journal Entries for Purchase, Return, and Remittance-Perpetual System On April 13, the Kes- Loa selman Company purchased $25,000 of merchandise from the Krausman Company, with terms of 1/10, /30. On April 15, Kesselman paid $500 to Ace Trucking Company for freight on the shipment. On April 18, Kesselman Company returned $800 of merchandise for credit. Final payment was made to Kraus- man on April 22. Kesselman Company records purchases using the perpetual inventory system. Required Ptepare the journal entries that Kesselman Company should make on April 13, 15, 18, and 22