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6. On July 22, Peter sold $23,500 of inventory items on credit with the terms 2/15, net 30. Payment on $15,000 sales was received on August 1 and the remaining payment was received on August 12. Assuming Peter uses the gross method of accounting for sales discounts, which one of the following entries was made on August 1 to record the cash received? a. Cash 14,700 Sales Discount. 300 Accounts Receivable. b. Cash......... Accounts Receivable. c. Cash. d. Accounts Receivable. Accounts Receivable. Sales Discount Forfeited.... a. $ 402,000. b. $ 390,000. wwwmmmmmmm c. $1,440,000. d. $ 378,000. 15,000 14,700 300 15,000 15,000 14,700 7. Wellington Corp. has outstanding accounts receivable totaling $6.5 million as of December 31 and sales on credit during the year of $24 million. There is also a credit balance of $12,000 in the allowance for doubtful accounts. If the company estimates that 6% of its outstanding receivables will be uncollectible, what will be the amount of bad debt expense recognized for the year? 300

6. On July 22, Peter sold $23,500 of inventory items on credit with the terms 2/15, net 30. Payment on $15,000 sales was received on August 1 and the remaining payment was received on August 12. Assuming Peter uses the gross method of accounting for sales discounts, which one of the following entries was made on August 1 to record the cash received? a. Cash 14,700 Sales Discount. 300 Accounts Receivable. b. Cash......... Accounts Receivable. c. Cash. d. Accounts Receivable. Accounts Receivable. Sales Discount Forfeited.... a. $ 402,000. b. $ 390,000. wwwmmmmmmm c. $1,440,000. d. $ 378,000. 15,000 14,700 300 15,000 15,000 14,700 7. Wellington Corp. has outstanding accounts receivable totaling $6.5 million as of December 31 and sales on credit during the year of $24 million. There is also a credit balance of $12,000 in the allowance for doubtful accounts. If the company estimates that 6% of its outstanding receivables will be uncollectible, what will be the amount of bad debt expense recognized for the year? 300

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please answer 6 and 7 please sir urgently without plagiarism please 

6. On July 22, Peter sold $23,500 of inventory items on credit with the terms 2/15, net 30. Payment on $15,000 sales was received on August 1 and the remaining payment was received on August 12. Assuming Peter uses the gross method of accounting for sales discounts, which one of the following entries was made on August 1 to record the cash received? a. Cash... 14,700 Sales Discount. 300 Accounts Receivable. b. Cash.... Accounts Receivable. Accounts Receivable. c. Cash.... d. Accounts Receivable. Sales Discount Forfeited.. a. $ 402,000. b. $390,000. c. $1,440,000. d. $ 378,000. 15,000 14,700 a. Loss of $300,000. b. Gain of $530,000. c. Loss of $1,130,000. d. Loss of $230,000. 300 15,000 15,000 14,700 7. Wellington Corp. has outstanding accounts receivable totaling $6.5 million as of December 31 and sales on credit during the year of $24 million. There is also a credit balance of $12,000 in the allowance for doubtful accounts. If the company estimates that 6% of its outstanding receivables will be uncollectible, what will be the amount of bad debt expense recognized for the year? 300 8. Sun Inc. factors $6,000,000 of its accounts receivables without recourse for a finance charge of 5%. The finance company retains an amount equal to 10% of the accounts receivable for possible adjustments. Sun estimates the fair value of the recourse liability at $230,000. What would be recorded as a gain (loss) on the transfer of receivables?
Transcribed Image Text:6. On July 22, Peter sold $23,500 of inventory items on credit with the terms 2/15, net 30. Payment on $15,000 sales was received on August 1 and the remaining payment was received on August 12. Assuming Peter uses the gross method of accounting for sales discounts, which one of the following entries was made on August 1 to record the cash received? a. Cash... 14,700 Sales Discount. 300 Accounts Receivable. b. Cash.... Accounts Receivable. Accounts Receivable. c. Cash.... d. Accounts Receivable. Sales Discount Forfeited.. a. $ 402,000. b. $390,000. c. $1,440,000. d. $ 378,000. 15,000 14,700 a. Loss of $300,000. b. Gain of $530,000. c. Loss of $1,130,000. d. Loss of $230,000. 300 15,000 15,000 14,700 7. Wellington Corp. has outstanding accounts receivable totaling $6.5 million as of December 31 and sales on credit during the year of $24 million. There is also a credit balance of $12,000 in the allowance for doubtful accounts. If the company estimates that 6% of its outstanding receivables will be uncollectible, what will be the amount of bad debt expense recognized for the year? 300 8. Sun Inc. factors $6,000,000 of its accounts receivables without recourse for a finance charge of 5%. The finance company retains an amount equal to 10% of the accounts receivable for possible adjustments. Sun estimates the fair value of the recourse liability at $230,000. What would be recorded as a gain (loss) on the transfer of receivables?
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