Answer July 12: Sold Merchandise To Wally Butler

Answer July 12 Sold Merchandise To Wally Butler Who Paid The 130

Answer July 12 Sold merchandise to Wally Butler, who paid the $1,300 purchase with cash. The goods cost Evergreen Company $871. 15 Sold merchandise to Claudio's Chair Company at a selling price of $5,800 on terms 3/10, n/30. The goods cost Evergreen Company $3,886. 20 Sold merchandise to Otto's Ottomans at a selling price of $3,800 on terms 3/10, n/30. The goods cost Evergreen Company $2,546. 23 Collected payment from Claudio's Chair Company from the July 15 sale. Aug. 25 Collected payment from Otto's Ottomans from the July 20 sale. Required: Assuming that Sales Discounts are reported as contra-revenue, compute Net Sales for the two months ended August 31. (Round your answer to the nearest dollar amount. Omit the "$" sign in your response.)

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To accurately compute the net sales for the period ending August 31, we must analyze each sales transaction detail, accounting for sales discounts where applicable, as sales discounts are recognized as contra-revenue accounts, reducing gross sales. The net sales calculation involves summing all sales revenue less any discounts given for early payments, along with revenues that have been fully collected in cash or accounts receivable.

First, let's examine the initial transaction on July 12. Wally Butler purchased merchandise for $1,300, paid in cash. Since the payment was made immediately, no sales discount is involved, and the full sale amount contributes to net sales. The cost of goods sold (COGS) for this transaction was $871, but COGS does not directly impact net sales calculation, which focuses on revenue recognition.

The next significant transaction involved Claudio's Chair Company on July 15, with the sale date being July 15, but the payment was collected on August 23. The sale price was $5,800, with terms 3/10, n/30, meaning that a 3% discount applies if paid within 10 days of the sale date. Since the payment was made after the 10-day window, no discount would be taken, and the full amount of $5,800 is recognized as revenue.

Similarly, the third sale on July 20 to Otto's Ottomans was for $3,800 with the same payment terms. The payment was collected on August 25, which is beyond the 10-day discount window, so no discount applies. The total recognized revenue in this case is $3,800.

Now, considering the collections, the payments from Claudio's Chair Company and Otto's Ottomans are both after the discount period, indicating no discounts were taken. Therefore, the total sales revenue from these transactions remains at the gross amounts: $5,800 and $3,800, respectively.

The total gross sales for the period are calculated as follows:

  • Wally Butler: $1,300
  • Claudio's Chair Company: $5,800
  • Otto's Ottomans: $3,800

Adding these, the gross sales before any discounts are:

1,300 + 5,800 + 3,800 = 10,900

Since no sales discounts were applied (as all the payments occurred after the discount periods), the total sales discounts are zero. Therefore, net sales equal gross sales of $10,900.

Thus, the net sales for the two months ending August 31 are calculated as $10,900. If any sales discounts have been given, the amount of discounts applied would be subtracted from gross sales; however, based on the provided information, no discount was utilized in these transactions.

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