Chapter 5, Problem 5.16AE

LO 1, 2, 3

(Learning Objectives 1, 2, 3: Apply GAAP for sales, sales returns, and sales discounts) Antique Interiors reported the following transactions in October:

Oct 2	Sold merchandise on account to Tim Hinkel, $1,200, terms 1/10, n/30.
10	Sold merchandise on account to Ben Hoffman, $2,600, terms 2/10, n/30.
11	Collected payment from Hinkel for the October 2 sale.
15	Hoffman returned $2,000 of the merchandise purchased on October 10.
19	Collected payment from Hoffman for the balance of the October 10 sale.

Requirements

  1.    Record the foregoing transactions in the journal of Antique Interiors using the gross method. (You do not need to make the cost of sales journal entries; assume that these entries will be made by the company when it makes its other adjusting entries at period end.)

  2.    Calculate the amount of gross sales minus sales discounts for the month of October.