1. Amo Co. sold goods with a list price of $60,000 on Dec. 14. Because the customer is new to the company, Amo decides to give the customer 10% Trade discount. The terms for sales (cash) discount are 2/10, n/30. By Dec 23, Amo had collected cash on $18,000 (gross price) of these receivables. On Dec 31 Amo collected cash on $5,000 (gross price) of the receivables. By Dec. 31, Amos had sales return of $1,500 (gross price) for the sales. The company chooses to record the sales return as they occur Required: Prepare journal entries for the above transactions or events. A. Assuming the gross price method is used. B. Assuming the net price method us used.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Step by step
Solved in 2 steps with 2 images
