[The following information applies to the questions displayed below.] The following data were selected from the records of Sykes Company for the year ended December 31, current year. Balances January 1, current year Accounts receivable (various customers) Allowance for doubtful accounts $118,000 6,000 In the following order, except for cash sales, the company sold merchandise and made collections on credit terms 2/10, n/30 (assume a unit sales price of $600 in all transactions). Transactions during current year: a. Sold merchandise for cash, $242,000. b. Sold merchandise to R. Smith; invoice price, $9,500. c. Sold merchandise to K. Miller; invoice price, $39,000.
[The following information applies to the questions displayed below.] The following data were selected from the records of Sykes Company for the year ended December 31, current year. Balances January 1, current year Accounts receivable (various customers) Allowance for doubtful accounts $118,000 6,000 In the following order, except for cash sales, the company sold merchandise and made collections on credit terms 2/10, n/30 (assume a unit sales price of $600 in all transactions). Transactions during current year: a. Sold merchandise for cash, $242,000. b. Sold merchandise to R. Smith; invoice price, $9,500. c. Sold merchandise to K. Miller; invoice price, $39,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
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.
Question
i need the answer quickly
![Returns, and Bad Debts LO6-1, 6-2
[The following information applies to the questions displayed below.]
The following data were selected from the records of Sykes Company for
the year ended December 31, current year.
Balances January 1, current year
Accounts receivable (various customers)
Allowance for doubtful accounts
$118,000
6,000
In the following order, except for cash sales, the company sold merchandise
and made collections on credit terms 2/10, n/30 (assume a unit sales price
of $600 in all transactions).
Transactions during current year:
a. Sold merchandise for cash, $242,000.
b. Sold merchandise to R. Smith; invoice price, $9,500.
c. Sold merchandise to K. Miller; invoice price, $39,000.
d. Two days after purchase date, R. Smith returned one of the units
purchased in (b) and received account credit.
e. Sold merchandise to B. Sears; invoice price, $27,000.
f. R. Smith paid his account in full within the discount period.
g. Collected $98,000 cash from customer sales on credit in prior year, all
within the discount periods.
h. K. Miller paid the invoice in (c) within the discount period.
i. Sold merchandise to R. Roy; invoice price, $19,500.
j. Three days after paying the account in full, K. Miller returned seven
defective units and received a cash refund.
k. After the discount period, collected $5,000 cash on an account
receivable on sales in a prior year.
1. Wrote off a prior year account of $3,000 after deciding that the
amount would never be collected.
m. The estimated bad debt rate used by the company was 1.0 percent of
credit sales net of returns.
P6-1 Part 2
2. Show how the accounts related to the preceding sale and collection activities should be
reported on the current year income statement.
Note: Round your answers to the nearest whole dollar amount.
Answer is complete but not entirely correct.
SYKES COMPANY
Income Statement (partial)
For the Year Ended December 31, Current Year
Sales revenue
Less Sales returns and allowances
Less: Sales discounts
Net sales revenue
Selling, general, and administrative expenses
Bad debt expense
Bad debt expense
$ 337,000 (
2,834
4,800 x
$329,366
902
330,268](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fab52a0f9-cc1f-45be-8fb6-d020faab548c%2F929896e6-cc9f-483c-aa08-12210749f757%2F21s2jdz_processed.png&w=3840&q=75)
Transcribed Image Text:Returns, and Bad Debts LO6-1, 6-2
[The following information applies to the questions displayed below.]
The following data were selected from the records of Sykes Company for
the year ended December 31, current year.
Balances January 1, current year
Accounts receivable (various customers)
Allowance for doubtful accounts
$118,000
6,000
In the following order, except for cash sales, the company sold merchandise
and made collections on credit terms 2/10, n/30 (assume a unit sales price
of $600 in all transactions).
Transactions during current year:
a. Sold merchandise for cash, $242,000.
b. Sold merchandise to R. Smith; invoice price, $9,500.
c. Sold merchandise to K. Miller; invoice price, $39,000.
d. Two days after purchase date, R. Smith returned one of the units
purchased in (b) and received account credit.
e. Sold merchandise to B. Sears; invoice price, $27,000.
f. R. Smith paid his account in full within the discount period.
g. Collected $98,000 cash from customer sales on credit in prior year, all
within the discount periods.
h. K. Miller paid the invoice in (c) within the discount period.
i. Sold merchandise to R. Roy; invoice price, $19,500.
j. Three days after paying the account in full, K. Miller returned seven
defective units and received a cash refund.
k. After the discount period, collected $5,000 cash on an account
receivable on sales in a prior year.
1. Wrote off a prior year account of $3,000 after deciding that the
amount would never be collected.
m. The estimated bad debt rate used by the company was 1.0 percent of
credit sales net of returns.
P6-1 Part 2
2. Show how the accounts related to the preceding sale and collection activities should be
reported on the current year income statement.
Note: Round your answers to the nearest whole dollar amount.
Answer is complete but not entirely correct.
SYKES COMPANY
Income Statement (partial)
For the Year Ended December 31, Current Year
Sales revenue
Less Sales returns and allowances
Less: Sales discounts
Net sales revenue
Selling, general, and administrative expenses
Bad debt expense
Bad debt expense
$ 337,000 (
2,834
4,800 x
$329,366
902
330,268
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