The company has an unadjusted debit balance in Accounts Receivable of $25,000 and an unadjusted credit balance of $10 in Allowance for Sales Discounts as of December 31. Of the $25,000 of receivables, $10,000 are within a 2% discount period that the company expects the buyers to take.

Complete the necessary adjusting entry by selecting the account names from the drop-down menus and the amounts in the Debit and Credit columns.

Question

Allyson Booker

Business

15 June, 00:36

The company has an unadjusted debit balance in Accounts Receivable of $25,000 and an unadjusted credit balance of $10 in Allowance for Sales Discounts as of December 31. Of the $25,000 of receivables, $10,000 are within a 2% discount period that the company expects the buyers to take.

Complete the necessary adjusting entry by selecting the account names from the drop-down menus and the amounts in the Debit and Credit columns.

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Precious Moses · Answer 1

Date Description Dr. Cr.

Dec 31 Sales discounts $200

Allowance for sales discounts $200

Explanation:

Expected sales discounts. $10,000 * 2% = $200

As the discount is expected and according to the accrual accounting concept the expenses accrued or expected to incurred should be recorded in the period in which revenue of that expense is recorded. Discount of 2% is expected to be availed by the customer amounting sales of $10,000. and it will be availed after year end as discount period will end after year end.