1.
False Value Hardware began 2013 with a credit balance of $31,600 in the allowance for sales
returns account. Sales and cash collections from customers during the year were $740,000 and
$700,000, respectively. False Value estimates that 4% of all sales will be returned. During 2013,
customers returned merchandise for credit of $23,000 to their accounts.
False Value Hardware began 2013 with a credit balance of $31,600 in the allowance for sales
returns account. Sales and cash collections from customers during the year were $740,000 and
$700,000, respectively. False Value estimates that 4% of all sales will be returned. During 2013,
customers returned merchandise for credit of $23,000 to their accounts.
False Value's 2013 income statement would report net sales of:
Solution
Solution:
Net Sales = Sales - Allowance for Sales Returns
Net Sales = 740,000 - (740,000*4%)
= 740,000 - 29,600
= 710,400.
Net Sales = $710,400.