The Following Transactions Were Selected From The Records Of

The Following Transactions Were Selected From the Records Of Evergreen

The following transactions were selected from the records of Evergreen Company: July 12 Sold merchandise to Wally Butler, who paid the $1,000 purchase with cash. The goods cost Evergreen Company $600. 15 Sold merchandise to Claudio's Chair Company at a selling price of $5,000 on terms 3/10, n/30. The goods cost Evergreen Company $3,500. 20 Sold merchandise to Otto's Ottomans at a selling price of $3,000 on terms 3/10, n/30. The goods cost Evergreen Company $1,900. 23 Collected payment from Claudio's Chair Company from the July 15 sale. Aug. 25 Collected payment from Otto's Ottomans from the July 20 sale. Required: Assuming that Sales Discounts are reported as contra-revenue, compute Net Sales for the two months ended August 31. (Omit the "$" sign in your response.)

Paper For Above instruction

In this analysis, we will calculate the net sales for Evergreen Company for the months ending August 31, based on the provided transaction records. Net sales are critical for understanding a company's revenue after deductions such as sales discounts, returns, and allowances. Given that sales discounts are reported as contra-revenue accounts, it is essential to account for these discounts to arrive at accurate net sales figures for July and August.

The transactions for Evergreen beginning from July 12 involve cash sales and credit sales, with some payments collected within the discount period. The key challenge is to determine the amount of sales discounts applicable for sales made on credit, which occurred on July 15 and July 20, and when payments were received.

Step 1: Calculate the Gross Sales for July and August

The gross sales are straightforward sums of the sales prices during each month.

- July Sales:

- July 12: Cash sale of 1,000 (no discount involved since paid immediately).

- July 15: Credit sale of 5,000 to Claudio's Chair Company

- July 20: Credit sale of 3,000 to Otto's Ottomans

Total gross sales in July = 1,000 + 5,000 + 3,000 = 9,000

- August sales:

There are no new sales recorded after July, only payments received.

Step 2: Determine Eligible Sales for Discounts

Sales discounts are applicable if payments are made within the discount period (10 days). The sale terms specify 3/10, n/30, indicating a 3% discount if paid within 10 days; otherwise, the net amount is due in 30 days.

- July 15 sale to Claudio's Chair:

Payment received on August 23. The sale date was July 15, and payment was made on August 23, which is 39 days later. Since this exceeds 10 days, the discount is not applicable.

- July 20 sale to Otto's Ottomans:

Payment received on August 25. The sale date was July 20, and payment was made 37 days later. Again, outside the 10-day discount window, so no discount applies.

- July 12 cash sale:

Paid immediately; discount not applicable.

Step 3: Calculate Sales Discounts and Adjustments

Since none of the credit sales paid within the discount period, no discounts are applied in this period.

Step 4: Compute Net Sales

Net sales are calculated by subtracting sales discounts from gross sales; since no discounts are applied here, net sales equal gross sales.

- July Net Sales = 9,000

- August net sales = 0 (no new sales recorded, only collections)

However, the collection of the credit sales on August 23 and August 25 affects receivables but not sales figures directly.

Conclusion:

For the two months ending August 31, the net sales amount to 9,000, given that no payments within the discount period occurred, and thus no sales discounts are deducted.

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