1. Restin Co. uses the gross method to record sales made on credit. On June 1, 2012, it made sales of $50,000 with terms 3/15, n/45. On June 12, 2012, Restin received full payment for the June 1 sale.
Prepare the required journal entries for Restin Co.
2. Use the information from BE7 2, assuming Restin Co. uses the net method to account for cash discounts.
Prepare the required journal entries for Restin Co.
3. Wilton, Inc. had net sales in 2012 of $1,400,000. At December 31, 2012, before adjusting entries, the balances in selected accounts were: Accounts Receivable $250,000 debit, and Allowance for Doubtful Accounts $2,400 credit. If Wilton estimates that 2% of its net sales will prove to be uncollectible, prepare the December 31, 2012, journal entry to record bad debt expense.
4. Use the information presented in BE7 4 for Wilton, Inc.
(a) Instead of estimating the uncollectibles at 2% of net sales, assume that 10% of accounts receivable will prove to be uncollectible. Prepare the entry to record bad debt expense.
(b) Instead of estimating uncollectibles at 2% of net sales, assume Wilton prepares an aging schedule that estimates total uncollectible accounts at $24,600. Prepare the entry to record bad debt expense.
5. Milner Family Importers sold goods to Tung Decorators for $30,000 on November 1, 2012, accepting Tung’s $30,000, 6 month, 6% note. Prepare Milner’s November 1 entry, December 31 annual adjusting entry, and May 1 entry for the collection of the note and interest.