On May 12, 2018, Falwell Computing Sold Five Computers to Computing

question 117

Essay

On May 12, 2018, Falwell Computing sold five computers to Computing Plus for $10,000, subject to terms 3/10, n/30. Falwell uses the net method of accounting for sales discounts.
Required:
1. Prepare the journal entry to record the sale.
2. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on May 20, 2018.
3. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on June 5, 2018.

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Definitions:

Estimated Total Factory Overhead Costs

The projected total of all indirect expenses related to the production process, including indirect labor, materials, and other overhead costs.

Estimated Activity Base

A projected measure of activity, such as labor hours or machine hours, used for allocating overhead costs in budgeting and costing.

Predetermined Overhead Rate

A rate calculated at the beginning of a period, used to allocate estimated overhead costs to products or services.

Direct Labor Dollars

The total cost of labor that can be directly attributed to the production of goods or services.