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Cullumber Hardware takes pride as the "shop around the corner" that can compete with the big-box home improvement stores by providing good service from knowledgeable sales associates (many of whom are retired local handymen). Cullumber has developed the following two revenue arrangements to enhance its relationships with customers and increase its bottom line. 1. Cullumber sells a specialty portable winch that is popular with many of the local customers for use at their lake homes (putting docks in and out, launching boats, etc.). The Cullumber winch is a standard manufacture winch that Cullumber modifies so the winch can be used for a variety of tasks. Cullumber sold 90 of these winches during 2025 at a total price of $29,700, with a warranty guarantee that the product was free of any defects. The cost of winches sold is $15,300. The assurance warranties extend for a 3-year period with an estimated cost of $2,700. In addition, Cullumber sold extended $370.gach 20 Gullumb

Cullumber Hardware takes pride as the "shop around the corner" that can compete with the big-box home improvement stores by providing good service from knowledgeable sales associates (many of whom are retired local handymen). Cullumber has developed the following two revenue arrangements to enhance its relationships with customers and increase its bottom line. 1. Cullumber sells a specialty portable winch that is popular with many of the local customers for use at their lake homes (putting docks in and out, launching boats, etc.). The Cullumber winch is a standard manufacture winch that Cullumber modifies so the winch can be used for a variety of tasks. Cullumber sold 90 of these winches during 2025 at a total price of $29,700, with a warranty guarantee that the product was free of any defects. The cost of winches sold is $15,300. The assurance warranties extend for a 3-year period with an estimated cost of $2,700. In addition, Cullumber sold extended $370.gach 20 Gullumb

FINANCIAL ACCOUNTING
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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Cullumber Hardware takes pride as the "shop around the corner" that can compete with the big-box home improvement stores by providing good service from knowledgeable sales associates (many of whom are retired local handymen). Cullumber has developed the following two revenue arrangements to enhance its relationships with customers and increase its bottom line. 1. 2. (b) - Cullumber sells a specialty portable winch that is popular with many of the local customers for use at their lake homes (putting docks in and out, launching boats, etc.). The Cullumber winch is a standard manufacture winch that Cullumber modifies so the winch can be used for a variety of tasks. Cullumber sold 90 of these winches during 2025 at a total price of $29,700, with a warranty guarantee that the product was free of any defects. The cost of winches sold is $15,300. The assurance warranties extend for a 3-year period with an estimated cost of $2,700. In addition, Cullumber sold extended warranties related to 20 Cullumber winches for 2 years beyond the 3-year period for $370 each. To bolster its already strong customer base, Cullumber implemented a customer loyalty program that rewards a customer with 1 loyalty point for every $10 of purchases on a select group of Cullumber products. Each point is redeemable for a $1 discount on any purchases of Cullumber merchandise in the following 2 years. During 2025, customers purchased select group products for $95,000 (all products are sold to provide a 45% gross profit) and earned 9,500 points redeemable for future purchases. The standalone selling price of the purchased products is $95,000. Based on prior experience with incentives programs like this, Cullumber expects 9,100 points to be redeemed related to these sales (Cullumber appropriately uses this experience to estimate the value of future consideration related to bonus points). Your answer is partially correct. Prepare the journal entries for Cullumber related to the sales of Cullumber winches with warranties. (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 O for the amounts. Do not round intermediate calculations. Round final answers to O decimal places, e.g. 5,125. List all debit entries before credit entries.) Account Titles and Explanation Cash Liability to Bonus Point Customers Sales Revenue (To record sales) Debit 37100 95000 Credit 132100
Transcribed Image Text:Cullumber Hardware takes pride as the "shop around the corner" that can compete with the big-box home improvement stores by providing good service from knowledgeable sales associates (many of whom are retired local handymen). Cullumber has developed the following two revenue arrangements to enhance its relationships with customers and increase its bottom line. 1. 2. (b) - Cullumber sells a specialty portable winch that is popular with many of the local customers for use at their lake homes (putting docks in and out, launching boats, etc.). The Cullumber winch is a standard manufacture winch that Cullumber modifies so the winch can be used for a variety of tasks. Cullumber sold 90 of these winches during 2025 at a total price of $29,700, with a warranty guarantee that the product was free of any defects. The cost of winches sold is $15,300. The assurance warranties extend for a 3-year period with an estimated cost of $2,700. In addition, Cullumber sold extended warranties related to 20 Cullumber winches for 2 years beyond the 3-year period for $370 each. To bolster its already strong customer base, Cullumber implemented a customer loyalty program that rewards a customer with 1 loyalty point for every $10 of purchases on a select group of Cullumber products. Each point is redeemable for a $1 discount on any purchases of Cullumber merchandise in the following 2 years. During 2025, customers purchased select group products for $95,000 (all products are sold to provide a 45% gross profit) and earned 9,500 points redeemable for future purchases. The standalone selling price of the purchased products is $95,000. Based on prior experience with incentives programs like this, Cullumber expects 9,100 points to be redeemed related to these sales (Cullumber appropriately uses this experience to estimate the value of future consideration related to bonus points). Your answer is partially correct. Prepare the journal entries for Cullumber related to the sales of Cullumber winches with warranties. (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 O for the amounts. Do not round intermediate calculations. Round final answers to O decimal places, e.g. 5,125. List all debit entries before credit entries.) Account Titles and Explanation Cash Liability to Bonus Point Customers Sales Revenue (To record sales) Debit 37100 95000 Credit 132100
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