Task: The Revenue/Receivables/Cash Cycle
Question 1:
Abe Company sold merchandise on credit to Bee Company for $1,000 on July 1, with terms of 2/10, net /30. On July 6, Bee returned $200 worth of merchandise claiming the materials were defective. On July 8, Abe received a payment from Bee and credited Accounts Receivable for $350. On July 24, Bee Company paid the remaining balance on its account.
a. How much was the total Sales Discounts given to Bee during July?
b. What was the total cash received from Bee during July?
Question 2:
An analysis and aging of accounts receivable of the Gibson Company at December 31, 2014, showed the following:
Accounts Receivable .................................. $800,000
Allowance for Doubtful Accounts
(before adjustment) ......................................... 36,000 (cr)
Accounts estimated to be uncollectible ............... 76,800
Compute the net realizable value of the accounts receivable of Gibson Company at December 31, 2014.