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On August 12, a company provides services on account to a customer for $4,000. However, on August 16, the customer is not completely satisfied with the service and the company grants an allowance on the amount owed of $490. On August 20, the customer makes full payment of the balance owed, excluding the allowance. Record the services provided on August 12, the sales allowance on August 16, and the cash collection on August 20. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

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Answer:

The journal entries are as follows:

August 12,

Accounts receivable A/c         Dr. $4,000

To service Revenue                                     $4,000

(recording of services provided )

August 16,

Sales allowance discount A/c         Dr. $490

To Accounts receivable                                     $490

(recording of sales allowance)

August 20,

Cash [$4,000 - $490] A/c         Dr. $3,510

To Accounts receivable                                     $3,510

(recording of cash collection)

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