(Learning Objectives 1, 2: Apply GAAP for proper revenue recognition; accountfor sales returns and allowances) Dearborn Industries sells to wholesalers. Customers mustpay within 15 days or at the point of sale using a credit card. Dearborn’s cost of goods sold is35% of sales. The company had the following selected transactions during March:March 3 Sold $25,000 of merchandise to Greenleaf Company on account.Sold $4,000 of merchandise to Yardley Corp., who paid by credit card. The creditcard company charges Dearborn a fee of 2% on credit card sales.March 4March 15 Greenleaf Company paid the balance of what it owed for the purchase on March 3.March 19 Sold $12,000 of merchandise to Zurich Co. on account.March 21 Zurich reported that some of the merchandise received was scratched and returned$500 worth of merchandise to Dearborn.March 23 Sold $38,000 of merchandise to Niles Co. on account.March 25 Zurich paid the balance of what it owed for the purchase on March 19.March 31 Dearborn made the adjusting entries for the month to accrue for estimated futurereturns. Dearborn estimates that 4% of total sales will be returned.March 5 Greenleaf Company returned $5,000 of the merchandise from March 3.March 7 Sold $1,000 of merchandise to Athens, Inc., on account.Requirements1. Record Dearborn’s transactions, including the cost of goods sold entry for each sale.2. Calculate the gross sales revenue for the month
(Learning Objectives 1, 2: Apply GAAP for proper revenue recognition; account
for sales returns and allowances) Dearborn Industries sells to wholesalers. Customers must
pay within 15 days or at the point of sale using a credit card. Dearborn’s cost of goods sold is
35% of sales. The company had the following selected transactions during March:
March 3 Sold $25,000 of merchandise to Greenleaf Company on account.
Sold $4,000 of merchandise to Yardley Corp., who paid by credit card. The credit
card company charges Dearborn a fee of 2% on credit card sales.
March 4
March 15 Greenleaf Company paid the balance of what it owed for the purchase on March 3.
March 19 Sold $12,000 of merchandise to Zurich Co. on account.
March 21 Zurich reported that some of the merchandise received was scratched and returned
$500 worth of merchandise to Dearborn.
March 23 Sold $38,000 of merchandise to Niles Co. on account.
March 25 Zurich paid the balance of what it owed for the purchase on March 19.
March 31 Dearborn made the
returns. Dearborn estimates that 4% of total sales will be returned.
March 5 Greenleaf Company returned $5,000 of the merchandise from March 3.
March 7 Sold $1,000 of merchandise to Athens, Inc., on account.
Requirements
1. Record Dearborn’s transactions, including the cost of goods sold entry for each sale.
2. Calculate the gross sales revenue for the month
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