ACC 305 Exam 2 || with 100% Error-free Solutions.

A cash equivalent is a short-term, highly liquid investment that is readily convertible into known amounts of cash and correct answers is so near its maturity that it presents insignificant risk of changes in interest rates. Trade Discounts correct answers Reduction from list price NOT in accounting records Customer is billed net of discounts Cash Discounts correct answers Presented in terms such as: 2/10, n/30 etc. Reported using Gross or Net Method Gross Method correct answers At the point of sale, debit Accounts Receivable and credit Sales for full amount If payment is made in time for discount, then debit Cash (sale price after discount), debit Sales Discounts (XR account), and credit Accounts Receivable Net Method (Discount Earned) correct answers At the point of sale, debit Accounts Receivable and credit Sales at the sales price including the discount When payment is made in time for discount, debit Cash and Credit Accounts Receivable Net Method (Discount Not Earned) correct answers At the point of sale, debit Accounts Receivable and credit Sales at the sales price including the discount Debit Cash at the sales price WITHOUT the discount, credit Accounts Receivable, credit Sales Discounts Forfeited (+R, +SE) On January 16, 2020, Max grants an allowance of $300 to Oliver because some of the hurricane glass is defective. The entry to record this transaction is as follows. correct answers Sales Returns and Allowances (+XR, -R, -SE) 300 A/R 300 If a company employs the gross method of recording accounts receivable from customers, then sales discounts taken should be reported as: correct answers A deduction from sales in the income statement Direct Write-off method correct answers When a receivable is determined to be uncollectible, a company charges the loss to Bad Debt Expense. Bad Debt Expense 8,000 A/R 8,000