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Required information P6-1 (Algo) Reporting Net Sales and Expenses with Discounts, Returns, and Bad Debts LO6-1, 6-2 Skip to question [The following information applies to
Required information
P6-1 (Algo) Reporting Net Sales and Expenses with Discounts, Returns, and Bad Debts LO6-1, 6-2
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[The following information applies to the questions displayed below.]
The following data were selected from the records of Sykes Company for the year ended December 31, current year.
Balances January 1, current year | |
---|---|
Accounts receivable (various customers) | $119,000 |
Allowance for doubtful accounts | 8,000 |
In the following order, except for cash sales, the company sold merchandise and made collections on credit terms 2/10, n/30 (assume a unit sales price of $500 in all transactions).
Transactions during current year:
- Sold merchandise for cash, $238,000.
- Sold merchandise to R. Smith; invoice price, $10,500.
- Sold merchandise to K. Miller; invoice price, $35,000.
- Two days after purchase date, R. Smith returned one of the units purchased in (b) and received account credit.
- Sold merchandise to B. Sears; invoice price, $28,000.
- R. Smith paid his account in full within the discount period.
- Collected $91,000 cash from customer sales on credit in prior year, all within the discount periods.
- K. Miller paid the invoice in (c) within the discount period.
- Sold merchandise to R. Roy; invoice price, $21,500.
- Three days after paying the account in full, K. Miller returned seven defective units and received a cash refund.
- After the discount period, collected $5,000 cash on an account receivable on sales in a prior year.
- Wrote off a prior year account of $4,000 after deciding that the amount would never be collected.
- The estimated bad debt rate used by the company was 1.0 percent of credit sales net of returns.
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