Question

he Dimitrios Company records the following transactions during September 2018: Cash sales to customers totaling $5,800. Sales to customers on credit cards totaling $18,800. The average credit card fee is 3.0%. The company collects all cash due from the credit card companies. A $2,000 sale on account to a long-time customer with terms of 2/10, n/30. The sale is made on September 5. The customer pays the invoice on September 14. A customer returns product they had purchased last month for $500. Dimitrios accepts the return and gives the customer a cash refund. Calculate the following amounts: Service charge expense for credit card sales Sales discount (contra-revenue) for sales on account Sales returns (contra-revenue) Gross sales revenue Net sales revenue Net cash collected from sales

Answer 1

Answer:

The Dimitrios Company

Service charge expense for credit card sales  = $564 ($18,800 * 3%)

Sales discount (contra-revenue) for sales on account = $40 ($2,000 * 2%)

Sales returns (contra-revenue) - $500

Gross sales revenue:

Cash                           $5,800

Cards                        $18,800

Accounts receivable $2,000

Total =                      $26,600

Net sales revenue = $26,100 ($26,600 - $500)

Net cash collected from sales:

Cash Sales $5,800

Card Sales $18,800

Accounts Receivable $2,000

Less: Card Fees $564

Cash Discounts $40

Cash Refund $500

Net cash = $ 25,496

Explanation:

a) Data and Analysis:

Sept. 2018:

Cash $5,800 Sales Revenue $5,800

Credit Cards Receivable $18,800 Sales Revenue $18,800

Credit Card Fee Expense $ 564 Cash $564

Cash $18,800 Credit Cards Receivable $18,800

Accounts Receivable $2,000 Sales Revenue $2,000, terms of 2/10, n/30.

Cash $1,960 Cash Discounts $40 Accounts Receivable $2,000

Sales Returns $500 Cash $500