90.2K

Verified Solution

Link Copied!

L&S Sales Limited had the following transactions in June 2022. L&S uses a perpetual inventory system and its cost of goods sold is 40% of the selling price and has an estimated return rate of 10%. 1. Sales on account for June 2022 were $120,000. 2. $168,000 was received as payments on account during the month. This included $7,500 from Mini-Store Inc., which had previously been written off. 3. L&S received returned merchandise of $4,000 from a customer. The merchandise was unopened and was returned to the store shelves. The customer's account was credited for the full amount. 4. Colville Co. Limited contacted the credit department because it was having difficulty making payments on its account. On June 15, they signed a 5%, 2-month note for the balance in their account ($24,000). 5. On June 30, the company advanced $6,000 to an employee. There is no interest on the amount and it is due in 6 months. 6. Based on a review of the aged accounts receivable, the accountant estimates that $16,000 will be uncollectible. The balance in the Allowance for Doubtful Accounts at May 31, 2022 was a credit of $5,000. 7. The balance in accounts receivable at June 1, 2022 was $210,000. There were no other receivables at June 1, 2022. Instructions (a) Prepare entries for the above transactions and any month end adjustments and accruals required. (25 marks) (b) Calculate the balances and show how the receivables will be shown on the statement of financial position at June 30, 2022

Answer & Explanation Solved by verified expert

See Answer