Answered: liability for outstanding gift…

Business

Accounting

liability for outstanding gift certificates at December 31, 2019

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 6MC

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Halifax Manufacturing allows its customers to return merchandise for any reason and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2024 with a refund liability of $390,000. During 2024, Halifax sold merchandise on account for $12,800,000. Halifax's merchandise costs are 70% of merchandise selling price. Also during the year, customers returned $370,000 in sales for credit, with $204,000 of those being returns of merchandise sold prior to 2024, and the rest being merchandise sold during 2024. Sales returns, estimated to be 3% of sales, are recorded as an adjusting entry at the end of the year. Required: 1. Prepare entries to (a) record actual returns in 2024 of merchandise that was sold prior to 2024; (b) record actual returns in 2024 of merchandise that was sold during 2024; and (c) adjust the refund liability to its appropriate balance at year end. 2. What is the amount of the year-end refund…
ABC Company runs a department store and grants loyalty awards to its customers. For every P 100 purchase made by the customer, the customer receives a credit of 5 points equivalent to P 5. The accumulated points can be used by the customer to as part or full payment of for merchandise purchased in the future. During the year 2019, the company made sales of P 10,000,000. The fair value of the points is equivalent to the total number of points awarded during the year. For the year 2019, ABC expects that 70,000 points will be redeemed but only 65,000 points were redeemed relating to 2019 sales. For the year 2020, an additional 20,000 points were redeemed and ABC revised its estimate that only 10,000 points granted in 2019 will be redeemed as of December 31,2020. How much revenue is recognized as a result of the redemption of points for the year 2020?
ABC Company runs a department store and grants loyalty awards to its customers. For every P 100 purchase made by the customer, the customer receives a credit of 5 points equivalent to P 5. The accumulated points can be used by the customer to as part or full payment of for merchandise purchased in the future.During the year 2019, the company made sales of P 10,000,000. The fair value of the points is equivalent to the total number of points awarded during the year. For the year 2019, ABC expects that 70,000 points will be redeemed but only 65,000 points were redeemed relating to 2019 sales. For the year 2020, an additional 20,000 points were redeemed and ABC revised its estimate that the total number of points that will be redeemed is 90,000 points.What amount of liability must be presented in the statement of financial position relating to customer loyalty awards at December 31,2020? How much revenue is recognized as a result of the redemption of points for the year 2019? and What…
Arrow Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Arrow's sales are for credit (no cash is collected at the time of sale). The company began 2021 with a refund liability of $400,000. During 2021, Arrow sold merchandise on account for $12,000,000. Also during the year, customers returned $520,000 in sales for credit, with $250,000 of those being returns of merchandise sold prior to 2021, and the rest being merchandise sold during 2021. Sales returns, estimated to be 5% of sales, are recorded as an adjusting entry at the end of the year. The amount to adjust the refund liability to its appropriate balance at year-end would be:A. 180,000B. 220,000C. 200,000D. 240,000
Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2021 with a refund liability of $340,000. During 2021, Halifax sold merchandise on account for $11,600,000. Halifax's merchandise costs it 75% of merchandise selling price. Also during the year, customers returned $575,000 in sales for credit, with $319,000 of those being returns of merchandise sold prior to 2021, and the rest being merchandise sold during 2021. Sales returns, estimated to be 5% of sales, are recorded as an adjusting entry at the end of the year. Required: 1. Prepare entries to (a) record actual returns in 2021 of merchandise that was sold prior to 2021; (b) record actual returns in 2021 of merchandise that was sold during 2021; and (c) adjust the refund liability to its appropriate balance at year end.2. What is the amount…
GoodBuy sells gift cards redeemable for GoodBuy products either in store or online. During 2018, GoodBuysold $1,000,000 of gift cards, and $840,000 of the gift cards were redeemed for products. As of December 31,2018, $30,000 of the remaining gift cards had passed the date at which GoodBuy concludes that the cards willnever be redeemed. How much gift card revenue should GoodBuy recognize in 2018?
Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2021 with a refund liability of $390,000. During 2021, Halifax sold merchandise on account for $12,400,000. Halifax's merchandise costs it 65% of merchandise selling price. Also during the year, customers returned $368,000 in sales for credit, with $203,000 of those being returns of merchandise sold prior to 2021, and the rest being merchandise sold during 2021. Sales returns, estimated to be 3% of sales, are recorded as an adjusting entry at the end of the year. Required: 2. What is the amount of the year-end refund liability after the adjusting entry is recorded?
Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2021 with a refund liability of $390,000. During 2021, Halifax sold merchandise on account for $12,400,000. Halifax's merchandise costs it 65% of merchandise selling price. Also during the year, customers returned $368,000 in sales for credit, with $203,000 of those being returns of merchandise sold prior to 2021, and the rest being merchandise sold during 2021. Sales returns, estimated to be 3% of sales, are recorded as an adjusting entry at the end of the year. a) Record the year-end adjusting entry for estimated returns. b) Record the adjusting entry for the estimated return of merchandise to inventory. c) What is the amount of the year-end refund liability after the adjusting entry is recorded?
Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax’s sales are for credit (no cash is collected at the time of sale). The company began 2021 with a refund liability of $300,000. During 2021, Halifax sold merchandise on account for $11,500,000. Halifax's merchandise costs is 65% of merchandise selling price. Also during the year, customers returned $450,000 in sales for credit, with $250,000 of those being returns of merchandise sold prior to 2021, and the rest being merchandise sold during 2021. Sales returns, estimated to be 4% of sales, are recorded as an adjusting entry at the end of the year.Required:1. Prepare entries to (a) record actual returns in 2021 of merchandise that was sold prior to 2021; (b) record actual returns in 2021 of merchandise that was sold during 2021; and (c) adjust the refund liability to its appropriate balance at year end.2. What is the amount of…
Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax’s sales are for credit (no cash is collected at the time of sale). The company began 2021 with a refund liability of $300,000. During 2021, Halifax sold merchandise on account for $11,500,000. Halifax's merchandise costs is 65% of merchandise selling price. Also during the year, customers returned $450,000 in sales for credit, with $250,000 of those being returns of merchandise sold prior to 2021, and the rest being merchandise sold during 2021. Sales returns, estimated to be 4% of sales, are recorded as an adjusting entry at the end of the year.Required:1. Prepare entries to (a) record actual returns in 2021 of merchandise that was sold prior to 2021; (b) record actual returns in 2021 of merchandise that was sold during 2021; and (c) adjust the refund liability to its appropriate balance at year end.2. What is the amount of…
alifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2024 with a refund liability of $470,000. During 2024, Halifax sold merchandise on account for $13,200,000. Halifax's merchandise costs are 60% of merchandise selling price. Also during the year, customers returned $524,000 in sales for credit, with $289,000 of those being returns of merchandise sold prior to 2024, and the rest being merchandise sold during 2024. Sales returns, estimated to be 4% of sales, are recorded as an adjusting entry at the end of the year. Required: Prepare entries to (a) record actual returns in 2024 of merchandise that was sold prior to 2024; (b) record actual returns in 2024 of merchandise that was sold during 2024; and (c) adjust the refund liability to its appropriate balance at year end. What is the amount of…
Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2018 with a refund liability of $390,000. During 2018, Halifax sold merchandise on account for $13,300,000. Halifax's merchandise costs it 65% of merchandise selling price. Also during the year, customers returned $386,000 in sales for credit, with $213,000 of those being returns of merchandise sold prior to 2018, and the rest being merchandise sold during 2018. Sales returns, estimated to be 3% of sales, are recorded as an adjusting entry at the end of the year. Record the year-end adjusting entry for estimated returns. Please don't provide answer in image format thank you