bs16

docx

School

University of the Philippines Diliman *

*We aren’t endorsed by this school

Course

1109

Subject

Accounting

Date

Nov 24, 2024

Type

docx

Pages

2

Uploaded by ProfStraw21956

Report
Under the ASPE (Accounting Standards for Private Enterprises), let's prepare the journal entries for Amodt Ltd. to record the sale on July 10, 2023, considering expected returns, and the actual returns on October 11, 2023, based on the information provided: (a) Journal entry to record the sale on July 10, 2023, including expected returns: 1. Recording the sale of GPS systems to retailers, accounting for expected returns: Journal Entry on July 10, 2023: bashCopy code Accounts Receivable $700 ,000 Sales Revenue $700 ,000 Estimated Returns Liability $105 ,000 Cost of Goods Sold $560 ,000 Inventory $560 ,000 Explanation: Debit Accounts Receivable for the selling price of GPS systems ($700,000). Credit Sales Revenue for the gross sales amount ($700,000). Credit Estimated Returns Liability for the estimated returns (15% of $700,000 = $105,000). This establishes a liability for the expected returns. Debit Cost of Goods Sold for the cost of goods sold ($560,000). Credit Inventory to reduce the inventory value by the cost of goods sold. (b) Journal entry to record the $78,000 of actual returns on October 11, 2023: 2. Recording the actual returns received from retailers: Journal Entry on October 11, 2023: bashCopy code Estimated Returns Liability $105 ,000 Accounts Receivable $78 ,000 Cost of Goods Sold $62 ,400 Inventory $62 ,400 Explanation: Debit Estimated Returns Liability to reduce the estimated liability for returns ($105,000 - $78,000 = $27,000 remaining).
Credit Accounts Receivable to reduce the amount owed by retailers due to the returns. Debit Cost of Goods Sold for the cost of the returned goods ($560,000 * 15% = $84,000, considering the cost of returned goods at the same rate as the expected returns). Credit Inventory to increase the inventory value due to the return of goods back into inventory. These journal entries align with the ASPE standards and account for the initial sale, the establishment of an estimated returns liability for expected returns, and the subsequent adjustment for actual returns received from retailers.
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
  • Access to all documents
  • Unlimited textbook solutions
  • 24/7 expert homework help