Cobb department store sells gift certificates redeemable only when merchandise is purchased. These gift certificates have an expiration date of two years after issuance date. Upon redemption or expiration, Cobb recognizes the unearned revenue as realized. Information for the current year is as follows: Unearned revenue,1/1 650,000 Gift certificates sold 2,250,000 Gift certificates redeemed 1,950,000 Expired gift certificates 100,000 Cost of goods sold 60%

Cobb department store sells gift certificates redeemable only when merchandise is purchased. These gift certificates have an expiration date of two years after issuance date. Upon redemption or expiration, Cobb recognizes the unearned revenue as realized. Information for the current year is as follows: Unearned revenue,1/1 650,000 Gift certificates sold 2,250,000 Gift certificates redeemed 1,950,000 Expired gift certificates 100,000 Cost of goods sold 60%

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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On July 10, 2020, Cheyenne Music sold CDs to retailers on account and recorded sales revenue of $658,000 (cost $506, 660). Cheyenne grants the right to return CDs that do not sell in 3 months following delivery. Past experience indicates that the normal return rate is 15%. By October 11, 2020, retailers returned CDs to Cheyenne and were granted credit of $80,000. Prepare Cheyenne's journal entries to record (a) the sale on July 10, 2020, and (b) $80,000 of returns on October 11, 2020, and on October 31, 2020. Assume that Cheyenne prepares financial statement on October 31, 2020. (To record sales) (To record cost of goods) (To record sales returns) (To record cost of goods returned)
Germo Company started business at the beginning of the current year. The entity established an allowance for doubtful accounts estimated at 5% of credit sales. During the year, the entity wrote off P50,000 of uncollectible accounts. Further analysis showed that the merchandise purchased amounted to P9,000,000 and ending merchandise inventory was P1,500,000. Goods were sold at 40% above cost. The total sales comprised 80% sales on account and 20% cash sales. Total collections from customers, excluding cash sales, amounted to P6,000,000. What is the amount of sales on account?
Evergreen Company sells lawn and garden products to wholesalers. The company’s fiscal year-end is December 31. During 2021, the following transactions related to receivables occurred: Feb. 28 Sold merchandise to Lennox, Inc., for $10,000 and accepted a 10%, 7-month note. 10% is an appropriate rate for this type of note. Mar. 31 Sold merchandise to Maddox Co. that had a fair value of $7,200, and accepted a noninterest-bearing note for which $8,000 payment is due on March 31, 2022. Apr. 3 Sold merchandise to Carr Co. for $7,000 with terms 2/10, n/30. Evergreen uses the gross method to account for cash discounts. 11 Collected the entire amount due from Carr Co. 17 A customer returned merchandise costing $3,200. Evergreen reduced the customer’s receivable balance by $5,000, the sales price of the merchandise. Sales returns are recorded by the company as they occur. 30 Transferred receivables of $50,000 to a factor without recourse. The factor…
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