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    Revenue and Accounts Receivable

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    The Revenue/Receivables/Cash Cycle

    Question 1
    Abe Company sold merchandise on credit to Bee Company for $1,000 on July 1, with terms of 2/10, net /30. On July 6, Bee returned $200 worth of merchandise claiming the materials were defective. On July 8, Abe received a payment from Bee and credited Accounts Receivable for $350. On July 24, Bee Company paid the remaining balance on its account.

    a. How much was the total Sales Discounts given to Bee during July?
    b. What was the total cash received from Bee during July?

    Question 2

    An analysis and aging of accounts receivable of the Gibson Company at December 31, 2014, showed the following:

    Accounts Receivable .................................. $800,000
    Allowance for Doubtful Accounts
    (before adjustment) ......................................... 36,000 (cr)
    Accounts estimated to be uncollectible ............... 76,800

    Compute the net realizable value of the accounts receivable of Gibson Company at December 31, 2014.

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    https://brainmass.com/business/allowance-method/revenue-accounts-receivable-590052

    Solution Preview

    The Revenue/Receivables/Cash Cycle

    Question 1
    Abe Company sold merchandise on credit to Bee Company for $1,000 on July 1, with terms of 2/10, net /30. On July 6, Bee returned $200 worth of merchandise claiming the materials were defective. On July 8, Abe received a payment from Bee and credited Accounts Receivable for $350. On July 24, Bee Company paid the remaining balance on its account.

    a. How ...

    Solution Summary

    In the solution, the total sales, total cash received and net realizable value of accounts receivable are computed.

    $2.19

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