Outdoor Expo provides guided fishing tours. The company charges $290 per person
ID: 2341986 • Letter: O
Question
Outdoor Expo provides guided fishing tours. The company charges $290 per person but offers a 10% discount to parties of four or more. Consider the following transactions during the month of May.
May 2 Charlene books a fishing tour with Outdoor Expo for herself and four friends at the group discount price ($1,305 = $261 × 5). The tour is scheduled for May 7.
May 7 The fishing tour occurs. Outdoor Expo asks that payment be made within 30 days of the tour and offers a 5% discount for payment within 15 days.
May 9 Charlene is upset that no one caught a single fish and asks management for a discount. Outdoor Expo has a strict policy of no discounts related to number of fish caught.
May 15 Upon deeper investigation, management of Outdoor Expo discovers that Charlene’s tour was led by a new guide who did not take the group to some of the better fishing spots. In concession, management offers a sales allowance of 40% of the amount due.
May 20 Charlene pays for the tour after deducting the sales allowance.
Required:
Q.1. Record the necessary transaction(s) for Outdoor Expo on each date. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to 2 decimal places.)
Q.2. Show how Outdoor Expo would present net revenues in its income statement. (Round your answers to 2 decimal places.)
(PLEASE HELP I REALLY DONT UNDERSTAND THIS!)
Explanation / Answer
Answer
Date
Accounts title
Debit
Credit
02-May
[No entry required to record 'booking of tour']
07-May
Accounts receivables
$ 1,305.00
Sales Revenue
$ 1,305.00
(Tour occurred and revenue recorded)
09-May
[No entry required]
15-May
Sales Allowance [1305 x 40%]
$ 522.00
Accounts receivables
$ 522.00
(Allowance recorded)
20-May
Cash
$ 743.85
Sales Discount [ 783 x 5%]
$ 39.15
Accounts receivables [ 1305 - 522]
$ 783.00
(Cash amount due now received within discount period)
Sales Revenue
$ 1,305.00
Less: Sales Return & Allowances
$ 522.00
Less: Sales Discount
$ 39.15
$ 561.15
Net Revenue
$ 743.85
Date
Accounts title
Debit
Credit
02-May
[No entry required to record 'booking of tour']
07-May
Accounts receivables
$ 1,305.00
Sales Revenue
$ 1,305.00
(Tour occurred and revenue recorded)
09-May
[No entry required]
15-May
Sales Allowance [1305 x 40%]
$ 522.00
Accounts receivables
$ 522.00
(Allowance recorded)
20-May
Cash
$ 743.85
Sales Discount [ 783 x 5%]
$ 39.15
Accounts receivables [ 1305 - 522]
$ 783.00
(Cash amount due now received within discount period)
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