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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Case 2-67 Comparative Analysis: Under Armour, Inc., versus Columbia Sportswear

Refer to the 10-K reports of Under Armour, Inc., and Columbia Sportswear that are available for download from the companion website at CengageBrain.com

Required:

3. Prepare the journal entry to record the following two events for Under Armour and Columbia. For simplicity, assume the event was recorded in a single journal entry.

a. What journal entry is necessary to record net sales for the year ending December 31, 2016? Assume that all sales were made on account.

b. What journal entry is necessary to record cash collections from customers during the year ending December 31, 2016?

To determine

Introduction:

Accounts receivable is an account associated with the debtors to whom goods were sold on credit and cash is yet to be collected from them. Afterwards when the cash are collected from these debtors, the cash account is debited and accounts receivable is credited.

Prepare the journal entry to recording of credit sales and collection of cash for the December 31, 2016 of Under Armour and Columbia Sportswear.

Explanation

When services are rendered on credit, the accounts receivable is debited to show an increase debtors and service revenue is credited to increases the revenue account by the same amount. This type of transaction increases the assets and equity element of the accounting equation...

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