Question : 131. On February 14, 2016, Prime Company sold 50 air-conditioning units : 1412690

131.

On February 14, 2016, Prime Company sold 50 air-conditioning units to L&P Heating and Cooling. The units list for $700 each, but L&P was granted a 30% trade discount. All of Prime's sales are subject to terms 2/10, n/30. Prime uses the net method of accounting for sales discounts.

Required:

1. Prepare the journal entry to record the sale.
2. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on February 22, 2016.
3. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on March 10, 2016. 
 
 

132.

Beethoven Music Company started business in March 2016. Sales for its first year were $400,000. Beethoven priced its merchandise to yield a 45% gross profit based on sales dollars. Industry statistics suggest that 10% of the merchandise sold to customers will be returned. Beethoven estimated its sales returns based on the industry average. During the year, customers returned $30,000 in sales. Beethoven uses a perpetual inventory system.

Required:

Prepare summary journal entries to record (1) sales, (2) sales returns, and (3) the year-end adjusting entry for estimated sales returns. Assume that cash has not yet been collected for merchandise that could yet be returned.