FINANCIAL ACCOUNTING
6th Edition
ISBN: 9781618533111
Author: DYCKMAN
Publisher: Cambridge Business Publishers
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Chapter 3, Problem 38E
a.
To determine
Prepare entries using financial statement and
b.
To determine
Prepare adjusting entry and journal entry to record inventory acquisition.
c.
To determine
Identify where to expect Mr. E to report its customer deposits.
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Allocating Transaction Price to Performance Obligations and Recording Sales
Maximum Inc. (retailer) has a loyalty program that rewards its customers one point per $1 spent. Points are redeemable for $0.20 off future purchases. A customer purchases products (cost of $280) for cash at the usual selling price of $400 and earns 400 points redeemable for $80 off future purchases of goods or services. The retailer expects redemption of 360 points or 90% of points earned.
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a. How should the transaction price be allocated among the performance obligation(s)?Note:Â Round each allocated transaction price in the table below to the nearest dollar.
Performance Obligations
TransactionPriceas Stated
StandaloneSellingPrice
AllocatedTransaction Price(rounded)
Product purchase
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Loyalty rewards
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b. Prepare Maximum’s journal entry to record the $400 sale to the customer where the customer earned 400…
How to journalize?
1. Product sales totaled $3 million (all customers paid with cash), and my company had paid $2.2 million for that inventory sold.2.Inventory purchases totaled $1.5 million during the quarter, all on a credit basis, with my company's vendors.
2. My company repaid outstanding accounts payable during the quarter in the amount of $1.7 million.
3. Marketing costs of $10,000 were paid in February, all related to a series of President’s Day TV advertisements.
4. Wages, rents, and other administrative expenses totaled $373,000. All, except the March rent of $50,000, were paid with cash. The month of March rent payments, totaling $50,000 and due on or before March 15, haven't been paid as of March 31.
Refer to the following selected financial information from Texas Electronics. Compute the company’s days’ sales in inventory for Year 2. (Use 365 days a year.)
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Year 2
Year 1
Cash
$ 37,700
$ 32,450
Short-term investments
92,000
61,000
Accounts receivable, net
86,500
80,500
Merchandise inventory
122,000
126,000
Prepaid expenses
12,300
9,900
Plant assets
389,000
339,000
Accounts payable
112,400
108,800
Net sales
712,000
677,000
Cost of goods sold
391,000
376,000
Chapter 3 Solutions
FINANCIAL ACCOUNTING
Ch. 3 - Prob. 1MCCh. 3 - Prob. 2MCCh. 3 - Prob. 3MCCh. 3 - Prob. 4MCCh. 3 - Prob. 5MCCh. 3 - Prob. 1QCh. 3 - Prob. 2QCh. 3 - Prob. 3QCh. 3 - Prob. 4QCh. 3 - Prob. 5Q
Ch. 3 - Prob. 6QCh. 3 - Prob. 7QCh. 3 - Prob. 8QCh. 3 - Prob. 9QCh. 3 - Prob. 10QCh. 3 - Prob. 11QCh. 3 - Prob. 12QCh. 3 - Prob. 13QCh. 3 - Prob. 14QCh. 3 - Prob. 15QCh. 3 - Prob. 16QCh. 3 - Prob. 17QCh. 3 - Prob. 18QCh. 3 - Prob. 19QCh. 3 - Prob. 20QCh. 3 - Prob. 21MECh. 3 - Prob. 22MECh. 3 - Prob. 23MECh. 3 - Prob. 24MECh. 3 - Prob. 25MECh. 3 - Prob. 26MECh. 3 - Prob. 27MECh. 3 - Prob. 28MECh. 3 - Prob. 29MECh. 3 - Prob. 30MECh. 3 - Prob. 31ECh. 3 - Prob. 32ECh. 3 - Prob. 33ECh. 3 - Prob. 34ECh. 3 - Prob. 35ECh. 3 - Prob. 36ECh. 3 - Prob. 37ECh. 3 - Prob. 38ECh. 3 - Prob. 39ECh. 3 - Prob. 40PCh. 3 - Prob. 41PCh. 3 - Prob. 42PCh. 3 - Prob. 43PCh. 3 - Prob. 44PCh. 3 - Prob. 45PCh. 3 - Prob. 46PCh. 3 - Prob. 47PCh. 3 - Prob. 48PCh. 3 - Prob. 49PCh. 3 - Prob. 50PCh. 3 - Prob. 51PCh. 3 - Prob. 52PCh. 3 - Prob. 53PCh. 3 - Prob. 54PCh. 3 - Prob. 55CPCh. 3 - Prob. 56CPCh. 3 - Prob. 57CPCh. 3 - Prob. 58CP
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- The following selected information is taken from the financial statements of Arnn Company for its most recent year of operations: During the year, Arnn had net sales of 2.45 million. The cost of goods sold was 1.3 million. Required: Note: Round all answers to two decimal places. 1. Compute the current ratio. 2. Compute the quick or acid-test ratio. 3. Compute the accounts receivable turnover ratio. 4. Compute the accounts receivable turnover in days. 5. Compute the inventory turnover ratio. 6. Compute the inventory turnover in days.arrow_forwardAllocating Transaction Price to Performance Obligations and Recording Sales Maximum Inc. (retailer) has a loyalty program that rewards its customers one point per $1 spent. Points are redeemable for $0.20 off future purchases. A customer purchases products (cost of $196) for cash at the usual selling price of $280 and earns 280 points redeemable for $56 off future purchases of goods or services. The retailer expects redemption of 252 points or 90% of points earned. Required a. How should the transaction price be allocated among the performance obligation(s)? *Note: Carry all decimals in calculations; round the final answer to the nearest dollar. Performance Obligations Product purchase s Loyalty rewards Total Transaction Price as stated Account Name To record sale of product. 280 ✔ S To record cost of sale of product. 280 S b. Prepare Maximum's journal entry to record the $280 sale to the customer and the cost of that sale where the customer earned 280 loyalty points. *Note: If a…arrow_forward
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