Delta Company sold goods to wholesalers on terms 2/15, net 30. The entity had no cash sales but 50% of the customers took advantage of the discount. The entity used the gross method of recording sales and accounts receivable. An analysis of the trade accounts receivables at year-end revealed the following: Collectible Age 0-15 days 16-30 days 31-60 days Over 60 days Amount 2,000,000 1,400,000 400,000 200,000 4,000,000 100% 95% 90% 50% What amount should be reported as allowance for sales discount at year-end?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Delta Company sold goods to wholesalers on terms 2/15, net 30. The entity had no
cash sales but 50% of the customers took advantage of the discount.
The entity used the gross method of recording sales and accounts receivable.
An analysis of the trade accounts receivables at year-end revealed the following:
Collectible
Age
0-15 days
16-30 days
31-60 days
Over 60 days
Amount
2,000,000
1,400,000
400,000
200,000
4,000,000
100%
95%
90%
50%
What amount should be reported as allowance for sales discount at year-end?
Transcribed Image Text:Delta Company sold goods to wholesalers on terms 2/15, net 30. The entity had no cash sales but 50% of the customers took advantage of the discount. The entity used the gross method of recording sales and accounts receivable. An analysis of the trade accounts receivables at year-end revealed the following: Collectible Age 0-15 days 16-30 days 31-60 days Over 60 days Amount 2,000,000 1,400,000 400,000 200,000 4,000,000 100% 95% 90% 50% What amount should be reported as allowance for sales discount at year-end?
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