Question

Assume that X-Men has an unadjusted Accounts Receivable balance of $10,000 and Allowance for Sales Discounts balance of $0. $1,000 of accounts receivable are within the 2% discount period and X-Men expects that buyers will take $20 in future-period discounts arising from this period's sales. The adjusting entry for sales discounts is:

Answer 1

Answer:

For X-Men, the Sales Discount should be recorded at the estimated discount amount that will be taken by the X-Men's customers, which is calculated as: $1,000 * 2% = $20.

The adjusting for sales discount X-Men should be recorded as followed:

Dr Sales Discount                                    20

Cr Allowance for Sales Discount           20

( to record the estimated sales discount taken)

in which, Sales Discount is a contra-revenue account which helps to record the Net Sales amount from the Gross Sales amount.

Explanation:

Answer 2

Answer: Debit sales discount and credit allowance for sales discounts for $20

Explanation: look at attached image