Answer:
Sacajawea Mercantile Co.
Effect of the payment:
1. The current assets will increase (Cash) and decrease (Accounts receivable) by $1,470 and $1,500 respectively.
2. The retained earnings will reduce by $40.
Account balances will now be:
Accounts Receivable $848,500 (850,000 - 1,500)
Allowance for Sales Discounts $440 (400 + 40)
Explanation:
a) Data and Calculations:
Sacajawea Mercantile Co.
Unadjusted Balances June 30, 20Y4 Account Balances*
Sales $10,000,000
Accounts Receivable 850,000
Allowance for Sales Discounts 400
Estimated sales discounts related to sales for the current fiscal year that will taken in the next fiscal year ending June 30, 20Y5 = $ 7,000
Analysis:
July 6, 20Y4 Cash $1,470 Cash Discounts $30 Accounts receivable (Mark Bishop) $1,500
2% sales discount of $1,500 = $30
Cash Received = $1,470
