Question
On October 23rd, 2020, LSU Company sold Christmas toys to UTB. The cost of the toys is $50,000, and the selling price is $100,000. The
On October 23rd, 2020, LSU Company sold Christmas toys to UTB. The cost of the toys is $50,000, and the selling price is $100,000. The sales terms are 2/10 (2% discount paid within 10 days of sales), n/30 (full payment within a month of sales), and f.o.b. shipping point. LSU Company estimated that toys with a sales value of $9,000 will be returned. On October 25th, LSU company received from UTB toys with a sale value of $7,000 due to product flaws. On November 1st, LSU Company received a check from UTB for the balance due.
Instructions
- Prepare journal entries for LSU Company to record the events on the following dates assuming sales and receivables are entered at the gross selling price (6 points).
| October 23rd |
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| October 24th |
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- On October 31, LSU Company prepares financial statements. Record necessary adjusting entries needed to be related to the sales on October 31, 2020 (4 points).
| October 31st |
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- Prepare the journal entry when LSU Company receives payment on November 1 (6 points).
| November 1st |
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- Assuming the payment is received on November 5th instead of November 1st, prepare the journal entry for LSU Company on November 5th (4 points).
| November 5th |
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College Accounting A Practical Approach
Authors: Jeffrey Slater, Debra Good
14th Canadian Edition
0135222419, 978-0135222416
