Business, 19.10.2020 18:01 malikapooh124

Outdoor Expo provides guided fishing tours. The company charges $300 per person but offers a 20% discount to parties of four or more. Consider the following transactions during the month of May. May 2 Charlene books a fishing tour with Outdoor Expo for herself and four friends at the group discount price ($1,200 = $240 × 5). The tour is scheduled for May 7.
May 7 The fishing tour occurs. Outdoor Expo asks that payment be made within 30 days of the tour and offers a 6% discount for payment within 15 days.
May 9 Charlene is upset that no one caught a single fish and asks management for a discount. Outdoor Expo has a strict policy of no discounts related to number of fish caught.
May 15 Upon deeper investigation, management of Outdoor Expo discovers that Charlene’s tour was led by a new guide who did not take the group to some of the better fishing spots. In concession, management offers a sales allowance of 30% of the amount due.
May 20 Charlene pays for the tour after deducting the sales allowance.

Required:
a. Record the necessary transaction(s) for Outdoor Expo on each date.
b. Calculate net revenues.
c. Show how Outdoor Expo would present net revenues in its income statement.

Answers: 3

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Answer from: kiasiab17

May 2 No entry is required as the transaction is yet to happen

May 7 DR Accounts Receivable $1,200

CR Tour Revenue $1,200

May 9 DR No entry required

May 15 DR Sales Allowance (1,200 * 30%) $360

CR Accounts Receivable $360

May 20 DR Cash $789.60

DR Sales Discount $50.40

CR Accounts Receivable $840

Working

Accounts Receivable = 1,200 - 360 sales allowance = $840

Sales Discount = 840 * 6% discount = $50.40

Cash = 840 - 50.40 = $789.60

b. Net Revenues

= Revenue - Sales allowance - Sales discount

= 1,200 - 360 - 50.40

= $789,60

c. Partial Income Statement

Tour Revenues $1,200

Less:

Sales Allowance $360

Sales Discount $50.60

($410.60)

Net Tour Revenue $789.40

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Outdoor Expo provides guided fishing tours. The company charges $300 per person but offers a 20% dis...

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