(a)
Sales discounts:
The term
Sale revenue recognition and the collection from the sales revenue are two different things because the sale revenue includes outstanding sales whereas the collection from the sales excludes advancement payments.
To compute:
The calculation of sales revenue for
Answer to Problem 63E
The sales revenue for the year
Explanation of Solution
The Citron Mechanical Systems sold on credit for
The sales revenue for the year
Thus, the revenue for the Citron Mechanical Systems is
(b)
Sales discounts:
The term
Sale revenue recognition and the collection from the sales revenue are two different things because the sale revenue includes outstanding sales whereas the collection from the sales excludes advancement payments.
To calculate:
The amount of cash collected from these sales.
Answer to Problem 63E
The amount of cash collected from these sales is
Explanation of Solution
The Citron Mechanical Systems sold on credit for
| Sale Revenue within discount period | |
| Less: Discount @ 1% | |
| Collection | |
| Collection from sales after discount | |
| Collection from Sales |
(c)
Sales discounts:
The term
Sale revenue recognition and the collection from the sales revenue are two different things because the sale revenue includes outstanding sales whereas the collection from the sales excludes advancement payments.
The
Answer to Problem 63E
The entry for recoding the entry of sales and cash collection is made properly.
Explanation of Solution
The Citron Mechanical Systems sold on credit for
| Date | Particulars | Debit | Credit |
| Accounts Receivable | |||
| Sale Revenue | |||
| (Sale on Credit with terms |
|||
| Cash | $6,82,680 | ||
| Sales Discount |
|||
| Accounts Receivable | |||
| (Cash collected from accounts receivable) |
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Chapter 5 Solutions
Cornerstones of Financial Accounting
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- Refer to RE22-2. Assume Heller Company had sales revenue of 510,000 in 2019 and 650,000 in 2020. Prepare Hellers partial income statements (through gross profit) for 2019 and 2020. RE22-2 Heller Company began operations in 2019 and used the LIFO method to compute its 300,000 cost of goods sold for that year. At the beginning of 2020, Heller changed to the FIFO method. Heller determined that its cost of goods sold under FIFO would have been 250,000 in 2019. For 2020, Hellers cost of goods sold under FIFO was 360,000, while it would have been 410,000 under LIFO. Heller is subject to a 21% income tax rate. Compute the cumulative effect of the retrospective adjustment on prior years income (net of taxes) that Heller would report on its retained earnings statement for 2020.arrow_forwardInferring Accounts Receivable Amounts At the end of 2019, Karras Inc. had a debit balance of 141,120 in its accounts receivable. Additionally, Karras had a credit balance in its allowance for doubtful accounts of 4,350 and 9,420 at the beginning and end of the year, respectively. During the year, Karras made credit sales of 1,530,000, collected receivables in the amount of 1,445,700, and recorded bad debt expense of 83, 750. Required: Next Level Compute the amount of accounts receivable that Karras wrote off during the year and the amount of accounts receivable at the beginning of the year.arrow_forward
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