Chapter 5, Problem 5.13AE

LO 1, 2

(Learning Objectives 1, 2: Apply GAAP for proper revenue recognition; account for sales allowances) Lakewood Jewelry sells to retailers who then resell the products. Lakewood does not offer sales discounts for early payment; it asks that customers pay in full within 15 days or at the point of sale with a credit card. The company had the following selected transactions during July:

July 2	Sold $50,000 of merchandise to Oceanside Jewels on account.
July 3	Sold $10,000 of merchandise to Brilliant Crystals, which paid by credit card. The credit card company charges Lakewood a fee of 2% on credit card sales.
July 16	Oceanside Jewels paid the balance of what it owed for the purchase on July 2.
July 17	Sold $65,000 of merchandise to Precious Stones on account.
July 19	Precious Stones noticed that some of the merchandise received was damaged, so it returned $5,000 worth of merchandise to Lakewood.
July 30	Precious Stones paid the balance of what it owed for the purchase on July 17.

Requirements

  1.    Journalize Lakewood’s July transactions. (You do not need to record the cost of goods sold.)

  2.    Calculate the gross sales revenue for the month.