Sales and Sales Returns and Allowances Rubin Enterprises had the following sales
ID: 2462361 • Letter: S
Question
Sales and Sales Returns and Allowances
Rubin Enterprises had the following sales-related transactions on a recent day:
List price of services provided on credit was $27,500; terms 2/10, n/30.
Collected $5,875 in cash for services to be provided in the future.
The customer complained about aspects of the services provided in Transaction a. To maintain a good relationship with this customer, Rubin granted an allowance of $1,500 off the list price. The customer had not yet paid for the services.
Rubin provided the services for the customer in Transaction b. Additionally, Rubin granted an allowance of $350 because the services were provided after the promised date. Because the customer had already paid, Rubin paid the $350 allowance in cash.
Required:
1. Prepare the necessary journal entry (or entries) for each of these transactions.
Account and Explanation
Debit
Credit
a.
Correct 6 of Item 1
Correct 7 of Item 1
Correct 8 of Item 1
Correct 9 of Item 1
Record sale
b.
Correct 12 of Item 1
Correct 13 of Item 1
Correct 14 of Item 1
Correct 15 of Item 1
Record collection of cash for future services
c.
Correct 18 of Item 1
Correct 19 of Item 1
Correct 20 of Item 1
Correct 21 of Item 1
Record allowance due to inadequate service being provided
d.
Correct 24 of Item 1
Correct 25 of Item 1
Correct 26 of Item 1
Correct 27 of Item 1
Record recognition of sales revenue
Correct 30 of Item 1
Correct 31 of Item 1
Correct 32 of Item 1
Correct 33 of Item 1
Record allowance for services which were performed late
Hide1. Prepare the necessary journal entry (or entries) for each of these transactions.
Account and Explanation
Debit
Credit
a.
Correct 6 of Item 1
Correct 7 of Item 1
Correct 8 of Item 1
Correct 9 of Item 1
Record sale
b.
Correct 12 of Item 1
Correct 13 of Item 1
Correct 14 of Item 1
Correct 15 of Item 1
Record collection of cash for future services
c.
Correct 18 of Item 1
Correct 19 of Item 1
Correct 20 of Item 1
Correct 21 of Item 1
Record allowance due to inadequate service being provided
d.
Correct 24 of Item 1
Correct 25 of Item 1
Correct 26 of Item 1
Correct 27 of Item 1
Record recognition of sales revenue
Correct 30 of Item 1
Correct 31 of Item 1
Correct 32 of Item 1
Correct 33 of Item 1
Record allowance for services which were performed late
Explanation / Answer
a)Debit Bank = 5875
Credit Accounts Receivable = 5875
..
b)Debit Accounts Receivable = 27,500
Credit Sales = 27.500
..
c)Debit Allowance = 1500
Credit Accounts Receivable = 1500
..
d)Debit Bank (27500-1500-5875) = 20125
Credit Accounts Receivable = 20125
..
e)Debit Allowance = 350
Credit Bank = 350
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