Explanation Accounts receivable : Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business. Prepare journal entry: Date Account Title and Explanation Debit Credit Accounts receivable $500,000 Sales revenue (2) $485,000 Return liability (1) $15,000 (To record the amount of sales revenue and sales returns and allowances) Table (2) Accounts receivables are an asset and it is increased. Therefore, debit accounts receivables account by $500,000. Sales revenue is a component of stockholders’ equity and it is increased. Therefore, credit sales revenue account by $485,000. Return liability is a liability and it is increased. Therefore, credit returns liability account by $15,000. Date Account Title and Explanation Debit Credit Return liability $5,000 Accounts receivable assigned $5,000 (To record sales returns and allowances) Table (5) Return liability is a liability and it is decreased...

Intermediate Accounting: Reporting and Analysis, 2017 Update

2nd Edition

ISBN: 9781337116619

Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher: Cengage Learning

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Chapter 6, Problem 4RE

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Chapter 6, Problem 3RE

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Horizon Manufacturing has the following financial information for the last quarter: • • Beginning finished goods inventory: $21,500 Raw material purchases: $32,400 Direct labor: $19,800 Manufacturing overhead: $15,300 • Cost of goods manufactured: $58,700 • Ending finished goods inventory: $19,200 What is the cost of goods sold for Horizon Manufacturing for this quarter? a. $37,200 b. $61,000 c. $69,500 d. $47,700 e. $54,900

Chapter 6 Solutions

Intermediate Accounting: Reporting and Analysis, 2017 Update

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Record the journal entry .

Solution Summary: The author explains that accounts receivable refers to the amounts to be received from customers upon the sale of goods and services on account.

Record the journal entry.

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Chapter 6 Solutions