Question

Presented below are selected transactions of Molina Company. Molina sells in large quantities to other companies and also sells its product in a small retail outlet.
March 1 Sold merchandise on account to Dodson Company for $10,400, terms 3/10, n/30.

3 Dodson Company returned merchandise worth $200 to Molina.

9 Molina collected the amount due from Dodson Company from the March 1 sale.

15 Molina sold merchandise for $1,000 in its retail outlet. The customer used his Molina credit card.

31

Molina added 1.8% monthly interest to the customer’s credit card balance.

Answer 1

Answer:

Accounts receivables 10,400 debit

Sales revenues                     10,400 credit

Sales returns and allowance 200 debit

          Accounts receivables         200 credit

cash                       9,894 debit

sales discounts        306 debit

         Accounts receivables        10,200 credit

accounts receivables   1,000 debit

        sales revenues                    1,000 credit

account receivables       18 debit

     interest revenue                        18 credit

Explanation:

we record the sales as usual, debit to accounts receivables and credit sales revenue.

The returned good decrease the value of the customer account hus, we decreased agsinst sales return and allowance.

We then, calculate the adjusted invoice balance and calcualte the discount:

balance: 10,400 invoice less 200 return = 10,200

discount granted as collection occur within first 10 days:

10,200 x 3% = 306

cash proceeds: 10,200 - 306 = 9,894

at the end of the month we calculate the interest of the 1,000 dollar credit sales:

interst on credit car sales:

1,000 x 1.8% = 18 dollar