HORNGREN'S FINANCIAL & MANGERIAL ACCOUNT
7th Edition
ISBN: 9780136505273
Author: MILLER-NOBLES
Publisher: PEARSON
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Question
Chapter 5, Problem 5.1CTEI
1.
To determine
Introduction:
Financial statements: The financial statements of a company are prepared at the end of an accounting year to calculate the total liabilities, total assets, net profit or loss, and increase or decrease in cash during the year. The financial statements are used by various external and internal parties.
The point at which the company should record the sale.
2.
To determine
Introduction:
Financial statements: The financial statements of a company are prepared at the end of an accounting year to calculate the total liabilities, total assets, net profit or loss, and increase or decrease in cash during the year. The financial statements are used by various external and internal parties.
To explain: Whether one agrees with person D’s manner of deciding to ship the goods and recording the sale. Also, provide a reason for the same.
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Students have asked these similar questions
QUESTION 1
An animal shelter plans to sell T-shirts bearing their logo at an upcoming crafts
fair. They find a supplier who charges $2.85 a piece for orange T-shirts. Printing
the logo on the shirt requires an additional $0.70 per shirt. The group places an
order for 300 T-shirts and pays a shipping fee of $22 upon receiving the T-shirts.
The journal entry on the receipt date should include:
a. A credit to inventory of $877
O b. A děbit to inventory of $855
O c. A credit to inventory of $1,065
O d. A debit to inventory of $1,087
Dobbs Wholesale Antiques makes all sales under terms of FOB shipping point. The company usually ships inventory to customers approximately one week after receiving the order. For orders received late in December, Kathy Dobbs, the owner, decides when to ship the goods. If profits are already at an acceptable level, Dobbs delays shipment until January. If profits for the current year are lagging behind expectations, Dobbs ships the goods during December.
Requirements
Under Dobbs’s FOB policy, when should the company record a sale?
Do you approve or disapprove of Dobbs’s manner of deciding when to ship goods to customers and record the sales revenue? If you approve, give your reason. If you disapprove, identify a better way to decide when to ship goods. (There is no accounting rule against Dobbs’s practice.)
Identifying and Recording Customer Option for Additional Merchandise
A large clothing retailer chain, Koll's, offers a sales incentive program where customers receive direct credit toward future purchases based upon the dollar amount of purchases today. For every $50 spent
today, the customer will earn a $6 credit to be used at Koll's in two weeks. The credit expires 5 days after it becomes active. Not all customers will redeem the credit in the 5-day window of time. Based
upon historical trends, Koll's estimates that 35% of the credits will be redeemed.
a. Determine how many performance obligations are included in a sales transaction during the sales incentive program.
Two performance obligations ◆
b. Assuming that Koll's sold $400,000 of merchandise (cost of $160,000) during the first day of the sales incentive period and 8,000, $6 credits were given, record the journal entry(ies) to record sales
revenue. Assume all sales were cash sales.
Note: Carry all decimals in calculations;…
Chapter 5 Solutions
HORNGREN'S FINANCIAL & MANGERIAL ACCOUNT
Ch. 5 - Which account does a merchandiser use that a...Ch. 5 - The two main inventory accounting systems are the...Ch. 5 - The journal entry for the purchase of inventory on...Ch. 5 - JC Manufacturing purchase d inventory for 5,300...Ch. 5 - Prob. 5QCCh. 5 - Suppose Daves Discounts Merchandise Inventory...Ch. 5 - Which of the following accounts would be closed at...Ch. 5 - What is the order of the subtotals that appear on...Ch. 5 - Prob. 9QCCh. 5 - Prob. 10AQC
Ch. 5 - Prob. 11BQCCh. 5 - What is a merchandiser, and what is the name of...Ch. 5 - Prob. 2RQCh. 5 - Describe the operating cycle of a merchandiser.Ch. 5 - What is Cost of Goods Sold (COGS), and where is it...Ch. 5 - How is gross profit calculated, and what does it...Ch. 5 - What are the two types of inventory accounting...Ch. 5 - What is an invoice?Ch. 5 - What account is debited when recording a purchase...Ch. 5 - Prob. 9RQCh. 5 - What is a purchase return? How does a purchase...Ch. 5 - Prob. 11RQCh. 5 - How is the net cost of inventory calculated?Ch. 5 - What are the two journal entries involved when...Ch. 5 - Prob. 14RQCh. 5 - When granting a sales allowance, is there a return...Ch. 5 - Prob. 16RQCh. 5 - Prob. 17RQCh. 5 - Prob. 18RQCh. 5 - What are the four steps involved in the closing...Ch. 5 - Prob. 20RQCh. 5 - Prob. 21RQCh. 5 - Prob. 22RQCh. 5 - Prob. 23RQCh. 5 - Prob. 24ARQCh. 5 - Prob. 25BRQCh. 5 - Prob. 26BRQCh. 5 - Prob. 27BRQCh. 5 - Prob. 28BRQCh. 5 - Prob. 29BRQCh. 5 - Prob. 30BRQCh. 5 - Prob. 31BRQCh. 5 - Comparing periodic and perpetual inventory systems...Ch. 5 - Prob. 5.2SECh. 5 - Prob. 5.3SECh. 5 - Prob. 5.4SECh. 5 - Prob. 5.5SECh. 5 - Prob. 5.6SECh. 5 - Prob. 5.7SECh. 5 - Prob. 5.8SECh. 5 - Prob. 5.9SECh. 5 - Prob. 5.10SECh. 5 - Prob. 5.11SECh. 5 - Prob. 5.12SECh. 5 - Prob. 5.13SECh. 5 - Prob. 5.14SECh. 5 - Prob. 5.15SECh. 5 - Prob. 5.16SECh. 5 - Prob. 5.17SECh. 5 - Prob. 5.18SECh. 5 - Prob. 5.19SECh. 5 - For all exercises, assume the perpetual inventory...Ch. 5 - Journalizing purchase transactions from an invoice...Ch. 5 - Prob. 5.22ECh. 5 - Prob. 5.23ECh. 5 - Prob. 5.24ECh. 5 - Prob. 5.25ECh. 5 - Use the following information to answer Exercises...Ch. 5 - Prob. 5.27ECh. 5 - Prob. 5.29ECh. 5 - Prob. 5.30ECh. 5 - Prob. 5.31ECh. 5 - Prob. 5.32ECh. 5 - Prob. 5.33ECh. 5 - Prob. 5.34ECh. 5 - Prob. 5.35ECh. 5 - Prob. 5.36APCh. 5 - Prob. 5.37APCh. 5 - Prob. 5.38APCh. 5 - Prob. 5.39APCh. 5 - Prob. 5.40APCh. 5 - Prob. 5.41APCh. 5 - Prob. 5.42APCh. 5 - Prob. 5.43BPCh. 5 - Prob. 5.44BPCh. 5 - Prob. 5.45BPCh. 5 - Prob. 5.46BPCh. 5 - Prob. 5.47BPCh. 5 - Prob. 5.48BPCh. 5 - Prob. 5.49BPCh. 5 - Prob. 5.50CPCh. 5 - Prob. 5.51CPCh. 5 - Prob. 5.52PSCh. 5 - Prob. 5.1CTDCCh. 5 - Prob. 5.1CTEICh. 5 - Prob. 5.1CTFC
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Similar questions
- Identifying and Recording Customer Option for Additional Merchandise A large clothing retailer chain, Koll’s, offers a sales incentive program where customers receive direct credit toward future purchases based upon the dollar amount of purchases today. For every $50 spent today, the customer will earn a $5 credit to be used at Koll’s in two weeks. The credit expires 5 days after it becomes active. Not all customers will redeem the credit in the 5-day window of time. Based upon historical trends, Koll’s estimates that 35% of the credits will be redeemed. a. Determine how many performance obligations are included in a sales transaction during the sales incentive program. Answerb. Assuming that Koll’s sold $700,000 of merchandise (cost of $280,000) during the first day of the sales incentive period, record the journal entry(ies) to record sales revenue. Assume all sales were cash sales.Note: Round each allocated transaction price to the nearest whole dollar. Performance…arrow_forwardCompany accepts goods on consignment from R Company and also purchases goods from S Company during the current month. E Company plans to sell the merchandise to customers during the following month. In each of these independent situations, who owns the merchandise at the end of the current month and should therefore include it in their companys ending inventory? Choose E, R, or S. A. Goods ordered from R, delivered and displayed on Es showroom floor at the end of the current month. B. Goods ordered from S, in transit, with shipping terms FOB destination. C. Goods ordered from R, in transit, with no stated shipping terms. D. Goods ordered from S, delivered and displayed on Es showroom floor at the end of the current month, with shipping terms FOB destination. E. Goods ordered from S, in transit, with shipping terms FOB shipping point.arrow_forwardCommunication Golden Eagle Company began operations on April 1 by selling a single product. Data on purchases and sales for the year are as follows: Purchases: Sales: The president of the company, Connie Kilmer, has asked for your advice on which inventory cost flow method should be used for the 32,000-unit physical inventory that was taken on December 31. The company plans to expand its product line in the future and uses the periodic inventory system. Write a brief memo to Ms. Kilmer comparing and contrasting the LIFO and FIFO inventory cost flow methods and their potential impacts on the companys financial statements.arrow_forward
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