1.

A/R (110,000*94%) Dr. 103,400

Sales 103,400
COGS
Inventory
2.
Cash Dr. 70,000
Commission (6%) 4,200
A/P (94%) 65,800
A/P 65,800
Cash 65,800
3.
Jan 02, 2012 N/R Dr. 10,000
Sales 10,000
Dec 31, 2012 Cash Dr. 11,000
N/R 10,000
Interest Rev. 1,000

4.
Sales Return & Allowance Dr. 78,000
A/R 78,000
Sales Return & Allowance Dr. 27,000 [(700,000*15%) – 78,000]
All. For Sales Return & Allowance 27,000
Option -2: If allowance has been created earlier-
Sales Return & Allowance Dr. 105,000 [700,000*15%]
All. For Sales Return & Allowance 105,000
All. For Sales Return & Allowance Dr. 78,000
A/R 78,000

Option -3: If allowance has been created earlier; but actual sales return is 110,000
Sales Return & Allowance Dr. 105,000 [700,000*15%]
All. For Sales Return & Allowance 105,000
All. For Sales Return & Allowance Dr. 105,000
Sales Return & Allowance Dr. 5,000
A/R 110,000

5.
Cash Dr. 18,850
Advertising exp Dr. 500
Commission exp Dr. 2150
Sales on consignment 21,500
COGS Dr. 13,200 [(20,000+2,000)*60%]
Inventory 13,200
6.
Total Commission revenue for Telephone Sellers Inc. (4000 - 3000) = 1000
To be recognized in:
January (1000 * 0%) = $0
February (1000 * 50%) = $500
March (1000 * 30%) = $300
April (1000 * 20%) = $200

7.
January 01 N/R Dr. 600,000
Sales 600,000
COGS Dr. 500,000
Inventory 500,000
Dec 31 Cash Dr. 700,000
N/R 600,000
Interest Rev. 100,000
8.
January 02 Cash Dr. 410,000
Sales Rev. 370,000
Unearned Installation Rev. 40,000
COGS Dr. 300,000
Inventory 300,000
March 31 Unearned Installation Rev. Dr. 20,000
Installation Rev. [(40,000/6)*3] 20,000
9.
(a) $10,00,000 will be recognized as sales revenue on the day of delivery.
(b) $8,00,000 will be recognized as sales revenue on the day of delivery.
(c) Sales revenue will be recognized on the day of delivery, at the present value of
the future payments.
10.
(a)
January 02 A/R Dr. 15,00,000
Sales 15,00,000
COGS Dr. -
Inventory -
Sales Return & Allowance Dr. 300,000 [1500,000*20%]
All. For Sales Return & Allowance 300,000
(b)
March 01 All. For Sales Return & Allowance Dr. 100,000
A/R 100,000
(c) Sales revenue can only be recognized after the expiry of the return period i.e.
after 4 months.