Question

Sarasota Company sold $8,780 of its specialty shelving to Elkins Office Supply Co. on account. Bridgeport estimates that an additional $215 in allowances will be granted to Elkins. Prepare the entries when Sarasota grants an allowance of $706 when some of the shelving does not meet exact specifications but still could be sold by Elkins. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Answer 1

See explanation section.

Step-by-step explanation:

A) Accounts Receivable $8,780

Sales Revenue $8,780

Sarasota Company sold its specialty shelving to Elkins Office Supply Co. on account.

(b) Sales Returns and Allowances $215

Allowances for Sales Returns and Allowances $215

To record an additional $215 in allowances to Elkins.

(c) Allowance for Sale Returns and Allowances $706

Accounts Receivable $706

To record an allowance of $706 when some of the shelving does not meet exact specifications. It means the products were damaged or defected.