An entity sells inventory with a list price of P10,000 under credit terms of 20%, 10%, 2/15, n/30. The entity uses PFRs 15 and estimates that only 80% of the cash discount will be taken. By the end of the reporting period, the account receivables are not yet settled and the entity changes its estimate of cash discount to be taken by 40%.Requirements:Provide the journal entry on the date of the sale and the year-end adjusting entry.Determine the amounts of net revenue and accounts receivable to be reported in the financial statements.

Accounts receivable is the amount receivable from the customers upon credit sales. Companies will…

Answered: An entity sells inventory with a list…

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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An entity sells inventory with a list price of P10,000 under credit terms of 20%, 10%, 2/15, n/30. The entity uses PFRs 15 and estimates that only 80% of the cash discount will be taken. By the end of the reporting period, the account receivables are not yet settled and the entity changes its estimate of cash discount to be taken by 40%.

Requirements:

Provide the journal entry on the date of the sale and the year-end adjusting entry.
Determine the amounts of net revenue and accounts receivable to be reported in the financial statements.

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