Blossom Company sells 320 units of its products for $20 each to Wildhorse inc. for cash. Blossom allows Wildhorse to return anyunused product within 30 days and receive a full refund. The cost of each product is $11. To determine the transaction price, Blossomdecides that the approach that is most predictive of the amount of consideration to which it will be entitled is the probability weightedamount. Using the probability-weighted amount. Blossom estimates that (1) 7 products will be returned, and (2) the returned productsare expected to be resold at a profit.Prepare the journal entries for Blossom at the time of the sale to Wildhorse including any expected returns. The company follows IFRS.(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 "0" for the amounts. List all debit entries before credit entries.)Account Titles and ExplanationCash(To record cash sale)(To record cost of goods sold).DebitCredit

Refund liability is the amount of sale revenue that the company does not expect or is entitled to.…

Answered: Debit | bartleby

Business

Accounting

Debit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Blossom Company sells 320 units of its products for $20 each to Wildhorse inc. for cash. Blossom allows Wildhorse to return any
unused product within 30 days and receive a full refund. The cost of each product is $11. To determine the transaction price, Blossom
decides that the approach that is most predictive of the amount of consideration to which it will be entitled is the probability weighted
amount. Using the probability-weighted amount. Blossom estimates that (1) 7 products will be returned, and (2) the returned products
are expected to be resold at a profit.
Prepare the journal entries for Blossom at the time of the sale to Wildhorse including any expected returns. The company follows IFRS.
(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 "0" for the amounts. List all debit entries before credit entries.)
Account Titles and Explanation
Cash
(To record cash sale)
(To record cost of goods sold).
Debit
Credit

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