Guidance on problem 5.5A
- Note 1 & note 2: Gross sales 911k, less returns 28k, less discounts 18k; net sales = 865k
- Note 1: Freight out expense = 33k
- Note 2: Rent revenue of 4 k is non-operating as the company is not operating as a landlord.
- Note 3 & 4: Sales commission paid and sales commission to be paid (already earned by salespersons) = sales commission expense = 9k. This company treats both salaries & commissions as “Salaries & Wages Expense†= 80k + 9k + 47k
- Note 4: Rent expense, after excluding prepayment (not yet enjoyed) = 18k