NASH COMPANY IS PRESENTLY TESTING A NUMBER OF NEW SEED PLANTERS THAT IT HAS RECENTLY DEVELOPED. TO STIMULATE INTEREST IT HAS DECIDED TO GRANT 5 OF ITS LARGEST CUSTOMERS THE UNCODITIONAL RIGHT OF RETURN TO THESE PRODUCTS IF NOT FULLY SATISFIED. THE RIGHT OF RETURN EXTENDS FOR 4 MONTHS. NASH ESTIMATES RETURNS OF 15%. NASH SELLS THESE PLANTERS ON ACCOUNT FOR 14000000(COST 630000) ON JAN 1 2020. CUSTOMERS ARE REQUIRED TO PAY THE FULL AMOUNT DUE BY MARCH 15 2020 ASSUME THAT ONE CUSTOMER RETURNS PLANTERS ON MARCH 1 2020 DUE TO UNSATISFACTORY PERFORMANCE. PREPARE THE JOURNAL ENTRY TO RECORD THIS TRANSACTION, ASSUMING THIS CUSTOMER PURCHASED 107,000 OF PLANTERS FROM NASH AND ALSO RECORDED THE ENTRY REQUIRED TO PAY THE FULL AMOUNT DUE BY MARCH 15,2020 TO RECORD SALES RETURNS TO RECORD COST OF GOODS RETURNED.

NASH COMPANY IS PRESENTLY TESTING A NUMBER OF NEW SEED PLANTERS THAT IT HAS RECENTLY DEVELOPED. TO STIMULATE INTEREST IT HAS DECIDED TO GRANT 5 OF ITS LARGEST CUSTOMERS THE UNCODITIONAL RIGHT OF RETURN TO THESE PRODUCTS IF NOT FULLY SATISFIED. THE RIGHT OF RETURN EXTENDS FOR 4 MONTHS. NASH ESTIMATES RETURNS OF 15%. NASH SELLS THESE PLANTERS ON ACCOUNT FOR 14000000(COST 630000) ON JAN 1 2020. CUSTOMERS ARE REQUIRED TO PAY THE FULL AMOUNT DUE BY MARCH 15 2020 ASSUME THAT ONE CUSTOMER RETURNS PLANTERS ON MARCH 1 2020 DUE TO UNSATISFACTORY PERFORMANCE. PREPARE THE JOURNAL ENTRY TO RECORD THIS TRANSACTION, ASSUMING THIS CUSTOMER PURCHASED 107,000 OF PLANTERS FROM NASH AND ALSO RECORDED THE ENTRY REQUIRED TO PAY THE FULL AMOUNT DUE BY MARCH 15,2020 TO RECORD SALES RETURNS TO RECORD COST OF GOODS RETURNED.

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

See similar textbooks

Similar questions

Teal Company is presently testing a number of new agricultural seed planters that it has recently developed. To stimulate interest, it has decided to grant to five of its largest customers the unconditional right of return to these products if not fully satisfied. The right of return extends for 4 months. Teal estimates returns of 20%. Teal sells these planters on account for $1,500,000 (cost $825,000) on January 2, 2020. Customers are required to pay the full amount due by March 15, 2020. (a) Prepare the journal entry for Teal at January 2, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 2, 2020 (To recognize revenue.) (To record cost of goods sold.) eTextbook and Media
Organic Growth Company is presently testing a number of new agricultural seed planters that it has recently developed. To stimulate interest, it has decided to grant to five of its largest customers the unconditional right of return to these products if not fully satisfied. The right of return extends for 4 months. Organic Growth estimates returns of 20%. Organic Growth sells these planters on account for $1,500,000 (cost $750,000) on January 2, 2020. Customers are required to pay the full amount due by March 15, 2020. Instructions a. Prepare the journal entry for Organic Growth at January 2, 2020. b. Assume that one customer returns planters on March 1, 2020, due to unsatisfactory performance. Prepare the journal entry to record this transaction, assuming this customer purchased $100,000 of planters from Organic Growth. c. Assume Organic Growth prepares financial statements quarterly. Prepare the necessary entries (if any) to adjust Organic Growth's financial results for the…
Wildhorse Company is presently testing a number of new agricultural seed planters that it has recently developed. To stimulate interest, it has decided to grant to five of its largest customers the unconditional right of return of these products if not fully satisfied. The right of return extends for 4 months. Wildhorse estimates returns of 20%. Wildhorse sells these planters on account for $1,400,000 (cost $700,000) on January 2, 2025. Customers are required to pay the full amount due by March 15, 2025. (a) Your answer is correct. Prepare the journal entry for Wildhorse at January 2, 2025. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Jan. 2, 2025 Jan. 2, 2025 Account Titles and Explanation Accounts Receivable Sales Revenue (To recognize revenue.) Cost of Goods Sold Inventory (To record…
Wildhorse Company is presently testing a number of new agricultural seed planters that it has recently developed. To stimulate interest, it has decided to grant to five of its largest customers the unconditional right of return of these products if not fully satisfied. The right of return extends for 4 months. Wildhorse estimates returns of 20%. Wildhorse sells these planters on account for $1,400,000 (cost $700,000) on January 2, 2025. Customers are required to pay the full amount due by March 15, 2025. (a) Prepare the journal entry for Wildhorse at January 2, 2025. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Account Titles and Explanation Jan. 2, 2025 Jan. 2, 2025 (To recognize revenue.) (To record cost of goods sold.) eTextbook and Media Save for Later List of Accounts Debit Attempts:…
Cullumber Company is presently testing a number of new agricultural seeds that it has recently harvested. To stimulate interest, it has decided to grant to five of its largest customers the unconditional right of return to these products if not fully satisfied. The right of return extends for 4 months. Cullumber sells these seeds on account for $1,560,000 (cost $702,000) on January 2, 2025, Customers are required to pay the full amount due by April 15, 2025. (a) Prepare the journal entry for Cullumber at January 2, 2025, assuming Cullumber estimates returns of 20% based on prior experience. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts) Date Account Titles and Explanation Jan. 2. 2025 Jan 2.2025 (To recognize revenue.) (To record cost of goods sold.) Debit Credit
In September 2020, Gaertner Corp. commits to selling 150 of its iPhone-compatible docking stations to Better Buy Co. for $15,000 ($100 per product). The stations are delivered to Better Buy over the next 6 months. After 90 stations are delivered, the contract is modified and Gaertner promises to deliver an additional 45 products for an additional $4,275 ($95 per station). All sales are cash on delivery. Instructions a. Prepare the journal entry for Gaertner for the sale of the first 90 stations. The cost of each station is $54. b. Prepare the journal entry for the sale of 10 more stations after the contract modification, assuming that the price for the additional stations reflects the standalone selling price at the time of the contract modification. In addition, the additional stations are distinct from the original products as Gaertner regularly sells the products separately. c. Prepare the journal entry for the sale of 10 more stations (as in (b)), assuming that the pricing…
In August 2020, Atlantic Corp, commits to selling 100 of its merchandise to Boy Co. for P30,000 (P300 per product). The merchandise is to be delivered to Boy over the next 6 months. After 60 mierchandises were delivered, the contract is modified and Commonio promises to deliver 80 more products for an additional P21,600 (P270 per station). At year-end, Atlantic delivered an additional 90 products. All sales are cash on delivery How much revenue will be recognized on the contract for the year 2020?
In August 2020, Atlantic Corp, commits to selling 100 of its merchandise to Boy Co. for P30,000 (P300 per product). The merchandise is to be delivered to Boy over the next 6 months. After 60 mierchandises were delivered, the contract is modified and Commonio promises to deliver 80 more products for an additional P21,600 (P270 per station). At year-end, Atlantic delivered an additional 90 products. All sales are cash on delivery Assume that the additional terms anpective modification to the original contract. How much revenue will be recognized on the contract for the year 2020?
On January 1, 2021, Lumberjack Co. needed to purchase a new log jammer; however, due to cash flow problems Lumberjack will not be able to make payments on the jammer until January 1, 2025. Lumberjack could buy the jammer on January 1, 2021 for $120,000 cash but instead has agreed to make 3 equal annual payments beginning January 1, 2025. The seller expects to earn interest at a rate of 8%. Calculate the annual payment if Lumberjack purchases the jammer on January 1, 2021 and pays for it by making three equal annual payments starting on January 1, 2025
Pasti Berhad values, advertises and sells residential property on behalf of its customers. The companyhas been in business for only a short time and is preparing a cash budget for the first four months ofyear 2020. Expected sales of residential properties are as follows.Year 2019 2020 2020 2020 2020Month December January February March AprilUnits sold 10 10 15 25 30The average price of each property is RM180,000 and Pasti Berhad charges a fee of 3% of the valueof each property sold. Pasti Berhad receives 1% in the month of sale and the remaining 2% in themonth after sale. The company has ten employees who are paid monthly. The average salary peremployee is RM36,000 per year. If more than 20 properties are sold in each month, each employeewill be paid in that month a bonus of RM1,500 for each additional property sold.Variable expenses are incurred at the rate of 50% of the value of each property sold and theseexpenses are paid in the month of sale. Fixed overheads of RM44,300 per month…
Moon Ltd. sells custom made furniture on 24 months' interest free terms to qualifying customers. On 30 June 2023, Moon Ltd. sells $71,600 of furniture to Jessie Ltd., which cost $40,300, payable by 30 June 2025. By 30 June 2024, only 40% of the ordered furniture was delivered. The appropriate interest rate for this transaction is determined to be 11.20% per annum. Moon Ltd. uses perpetual system. By 30 June 2025, all payment was made, and the remaining furniture was delivered. Required: Question 4 Calculate the present value of the $71,600 to be received on 30 June 2025.
Greenwell Farm Equipment sells a tractor to Farmer for $150,000 on January 1, 2025. The tractor is delivered that day. Greenwell agrees that the Farmer may delay the payment for 2 years. The market rate of interest is 8%. Refer to Greenwell Farms. How much interest revenue will Greenwell report on January 1, 2025?