Answered: Sales-Related Transactions After the…

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter8: Revenue Recognition, Receivables, And Advances From Customers

Section: Chapter Questions

Problem 18E

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Sales-Related Transactions

After the amount due on a sale of $145,225, terms 2/10, n/30, is received from a customer within the discount period, the seller consents to the return of the entire shipment. The cost of the merchandise returned was $79,874.

If required, round your answers to nearest whole value.

a. What is the amount of the refund owed to the customer?
$fill in the blank 1

b. Illustrate the effects on the accounts and financial statements of the return and the refund. If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases, net cash outflows, and all negative effects on net income as negative amounts.

Sales-Related Transactions
After the amount due on a sale of $145,225, terms 2/10, n/30, is received from a customer within the discount period, the seller consents to the return of the entire shipment. The cost of the merchandise returned was $79,874.
If required, round your answers to nearest whole value.
a. What is the amount of the refund owed to the customer?
$ 142,321 V
b. Illustrate the effects on the accounts and financial statements of the return and the refund. If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank.
Enter account decreases, net cash outflows, and all negative effects on net income as negative amounts.
Balance Sheet
Stockholders'
Assets
Liabilities
+
Equity
Cash v
+ Inventory
+ Est. Returns Inventory v
= Customer Refunds Payable v
+ No effect v
X
Statement of Cash Flows
Income Statement
Operating v
No effect v
Feedback
V Check My Work
a. The amount of the refund will be the merchandise returned less the amount of discount,
b. There are two separate effects of this transaction: one for the sales component, discount, and payment and one for the cost of the inventory sold and return of the merchandise to inventory.
Check My Work 3 more Check My Work uses remaining.
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