PnG Limited is a retail company that offers all qualifying customers 60 days’ credit, with...
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Accounting
PnG Limited is a retail company that offers all qualifying customers 60 days’ credit, with a 10% settlement discount on invoices settled within 30 days of the invoice date. The company made sales to the value of R5 500 000 for the financial year ended 31 December 2021, and the following apply to the sales figure: • 40% of sales were in cash. • 60% of sales were on credit, of which: • 80% were paid before 31 December 2021 and 70% of them paid within 30 days. • 20% remain outstanding at 31 December 2021, and management estimates that 75% will pay within 30 days.
REQUIRED: 1) Discuss how PnG Limited should account for the 20% credit sales outstanding at 31 December 2021.
2) Prepare the journal entries to account for PnG Limited’s sales for the financial year ending 31 December 2021. Make sure to include all journals relating to both credit and cash sales. Include statement references and show all calculation.
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