Question

he Dimitrios Company records the following transactions during September 2018: Cash sales to customers totaling $5,800. Sales to customers on credit cards totaling $18,800. The average credit card fee is 3.0%. The company collects all cash due from the credit card companies. A $2,000 sale on account to a long-time customer with terms of 2/10, n/30. The sale is made on September 5. The customer pays the invoice on September 14. A customer returns product they had purchased last month for $500. Dimitrios accepts the return and gives the customer a cash refund. Calculate the following amounts: Service charge expense for credit card sales Sales discount (contra-revenue) for sales on account Sales returns (contra-revenue) Gross sales revenue Net sales revenue Net cash collected from sales

Answer 1

The service charge expense for credit card sales is $564. The sales discount for sales on account is $40. The net cash collected from sales is $24,600.

Step-by-step explanation:

To calculate the service charge expense for credit card sales, we need to multiply the total credit card sales by the average credit card fee of 3.0%. In this case, the total credit card sales are $18,800. Therefore, the service charge expense for credit card sales is $18,800 * 3.0% = $564.

The sales discount for sales on account is calculated based on the terms of 2/10, n/30. This means that if the customer pays within 10 days, they are eligible for a 2% discount. To calculate the discount, we multiply the sale amount by the discount rate of 2%. In this case, the sale amount is $2,000. Therefore, the sales discount is $2,000 * 2% = $40.

The sales returns represent the value of products returned by customers. In this case, a customer returned a product worth $500. Therefore, the sales returns are $500.

The gross sales revenue is the total amount of sales before any deductions, including service charge expense and sales returns. To calculate the gross sales revenue, we add the cash sales, credit card sales, and sales on account. In this case, the cash sales are $5,800, the credit card sales are $18,800, and the sales on account are $2,000. Therefore, the gross sales revenue is $5,800 + $18,800 + $2,000 = $26,600.

The net sales revenue is the gross sales revenue minus the sales returns. In this case, the gross sales revenue is $26,600 and the sales returns are $500. Therefore, the net sales revenue is $26,600 - $500 = $26,100.

The net cash collected from sales is the sum of the cash sales and the cash collected from credit card sales. In this case, the cash sales are $5,800 and the credit card sales are $18,800. Therefore, the net cash collected from sales is $5,800 + $18,800 = $24,600.

Answer 2

The Dimitrios Company

Service charge expense for credit card sales = $564 ($18,800 * 3%)

Sales discount (contra-revenue) for sales on account = $40 ($2,000 * 2%)

Sales returns (contra-revenue) - $500

Gross sales revenue:

Cash $5,800

Cards $18,800

Accounts receivable $2,000

Total = $26,600

Net sales revenue = $26,100 ($26,600 - $500)

Net cash collected from sales:

Cash Sales $5,800

Card Sales $18,800

Accounts Receivable $2,000

Less: Card Fees $564

Cash Discounts $40

Cash Refund $500

Net cash = $ 25,496

Step-by-step explanation:

a) Data and Analysis:

Sept. 2018:

Cash $5,800 Sales Revenue $5,800

Credit Cards Receivable $18,800 Sales Revenue $18,800

Credit Card Fee Expense $ 564 Cash $564

Cash $18,800 Credit Cards Receivable $18,800

Accounts Receivable $2,000 Sales Revenue $2,000, terms of 2/10, n/30.

Cash $1,960 Cash Discounts $40 Accounts Receivable $2,000

Sales Returns $500 Cash $500