On April 2, 2021, Unbreakable Gifts Inc. shipped merchandise costing $40,000 to The Gift Warehouse on consignment. Unbreakable paid $2,000 in shipping costs to deliver the inventory. On June 5, 2021, The Gift Warehouse paid $1,000 in advertising on behalf of Unbreakable. On September 30, 2021, The Gift Warehouse advised Unbreakable that all of the inventory had been sold for a total of $75,000. On October 15, 2021, Unbreakable received payment from The Gift Warehouse for the proceeds, less a 15% commission and the outlay for the advertising. Required: Prepare all the journal entries for Unbreakable Gifts Inc. to account for the transaction from April 2 through October 15.

On April 2, 2021, Unbreakable Gifts Inc. shipped merchandise costing $40,000 to The Gift Warehouse on consignment. Unbreakable paid $2,000 in shipping costs to deliver the inventory. On June 5, 2021, The Gift Warehouse paid $1,000 in advertising on behalf of Unbreakable. On September 30, 2021, The Gift Warehouse advised Unbreakable that all of the inventory had been sold for a total of $75,000. On October 15, 2021, Unbreakable received payment from The Gift Warehouse for the proceeds, less a 15% commission and the outlay for the advertising. Required: Prepare all the journal entries for Unbreakable Gifts Inc. to account for the transaction from April 2 through October 15.

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 14E: On January 5, 2019, ShoeKing Corp. sells for cash 500 pairs of volleyball shoes to FootAction, a...

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On January 5, 2019, ShoeKing Corp. sells for cash 500 pairs of volleyball shoes to FootAction, a shoe retailer, for 70 each. FootAction has the right to return the shoes for any reason up to March 31, 2019, for a full refund. The cost of each pair of shoes is 32. ShoeKing predicts that it is probable that 40 pairs of the shoes will be returned. ShoeKing uses the perpetual method for inventory. Required: 1. Prepare ShoeKings journal entry on January 5, 2019, to account for this transaction. 2. Assume that FootAction returns 35 pairs of shoes on March 31, 2019. Prepare the journal entry to record this return.
On May 1, 2021, Company A shipped merchandise costing $16,000 to Company B on consignment. Company A paid $1,400 in shipping costs to deliver the inventory. On September 30, 2021, Company B advised Company Athat all of the inventory had been sold for a total of $54,000. On October 15, 2021, Company A received payment from Company B for the proceeds, less a 12% commission. Required: Prepare all the journal entries for Company A to account for the transaction from April 2 through October 15.
Zell Company had sales of $1,800,000 and related cost of merchandise sold of $1,150,000 for its first year of operations ending December 31, 2019. Zell Company provides customers a refund for any returned or damaged merchandise. At the end of the year, Zell Company estimates that customers will request refunds and allowances for 1.5% of sales and estimates that merchandise costing $16,000 will be returned. Assume that on February 3, 2020, Anderson Co. returned merchandise with a selling price of $5,000 for a cash refund. The returned merchandise originally cost Zell Company $3,100. (a) Journalize the adjusting entries on December 31, 2019, to record the expected customer refunds, allowances, andreturns. (b) Journalize the entries to record the returned merchandise and cash refund to Anderson Co.
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On December 31, 2019, Ana Inc. sold merchandise for P750,000 to Ysa Inc. The terms of the sales were net 30, FOB shipping point. The merchandise was shipped on December 31, 2019, and arrived at Ysa Inc. on January 5, 2020. Due to a clerical error, the sale was not recorded until January 2020 and the merchandise sold at a 25% markup on cost was included in inventory on December 31, 2019. What was the effect of the errors on cost of goods sold for 2019? A. understated by 600,000B. overstated by 600,000C. understated by 750,000D. overstated by 750,000
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On July 19, 2021, SLRTN Inc. sold 19,000 units of its inventory to a customer for a total cash price ofP1,235,000. One unit costs the company P26. An excerpt in the contract of sale states that all goods may be returned by the customer to the seller within 31 days from purchase should the goods be of unsatisfactory quality. Based on past experience, 7% of the sold units are usually returned. The company employs a perpetual inventory system. The entries on July 19, 2021 will include all of the following, EXCEPT A. Debit to cash, P1,235,000 B. Debit to refund liability, P34,580 C. Credit to sales revenue, P1,148,550 D. Credit to inventory, P494,000
On December 31, 2019, Ana Inc. sold merchandise for P750,000 to Ysa Inc. The terms of the sales were net 30, FOB shipping point. The merchandise was shipped on December 31, 2019, and arrived at Ysa Inc. on January 5, 2020. Due to a clerical error, the sale was not recorded until January 2020 and the merchandise sold at a 25% markup on cost was included in inventory on December 31, 2019. What was the effect of the errors on sales for 2019?A. Overstated by 750,000B. Overstated by 600,000 C. Understated by 750,000D. Understated by 600,000
On December 31, 2019, Ana Inc. sold merchandise for P750,000 to Ysa Inc. The terms of the sales were net 30, FOB shipping point. The merchandise was shipped on December 31, 2019, and arrived at Ysa Inc. on January 5, 2020. Due to a clerical error, the sale was not recorded until January 2020 and the merchandise sold at a 25% markup on cost was included in inventory on December 31, 2019. What was the net effect of the errors on retained earnings?A. No EffectB. Understated by 150,000C. Understated by 1,350,000 D. Overstated by 150,000
On December 31, 2019, Ana Inc. sold merchandise for P750,000 to Ysa Inc. The terms of the sales were net 30, FOB shipping point. The merchandise was shipped on December 31, 2019, and arrived at Ysa Inc. on January 5, 2020. Due to a clerical error, the sale was not recorded until January 2020 and the merchandise sold at a 25% markup on cost was included in inventory on December 31, 2019. What was the net effect of the errors on retained earnings? A no effect B understated by 1,350,000 C) understated by 150,000 overstated by 150,000
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