Entity A is a listed company in Hong Kong. Its business is trading nature. On 1 January 2022, Entity A sold 350 units of Product X to Entity B for $378 per unit payable on 31 December 2022. On 31 December 2022, the cash sale price of Product X is $417. The customer obtained control of the product at contract inception. However, the contract permits the customer to return the product within 90 days, i.e. on or before 31 March 2022. Product X is a new product. It suffers insufficient testing before the sales to Entity B on 1 January 2022. Thus, Entity A has no relevant historical evidence or other available market evidence of the product returns. On 31 March 2022, 128 units of Product X were returned. On 31 December 2022, all outstanding amount was settled. The cost of Product X is $274. The end of the reporting period of Entity A is 31 December. REQUIRED: Provide journal entries for Entity A from 1 January 2022 to 31 December 2022 under relevant accounting standards. ACCOUNTS FOR INPUT: | Bank | Payable | Receivable | Interest expense | Interest revenue | Inventory | PPE | | Asset for product to be returned | Commission expense | Commission revenue | Revenue | | Cost of sales | Contract asset | Contract liability | Retained earnings | No entry |
Entity A is a listed company in Hong Kong. Its business is trading nature. On 1 January 2022, Entity A sold 350 units of Product X to Entity B for $378 per unit payable on 31 December 2022. On 31 December 2022, the cash sale price of Product X is $417. The customer obtained control of the product at contract inception. However, the contract permits the customer to return the product within 90 days, i.e. on or before 31 March 2022. Product X is a new product. It suffers insufficient testing before the sales to Entity B on 1 January 2022. Thus, Entity A has no relevant historical evidence or other available market evidence of the product returns. On 31 March 2022, 128 units of Product X were returned. On 31 December 2022, all outstanding amount was settled. The cost of Product X is $274. The end of the reporting period of Entity A is 31 December. REQUIRED: Provide
ANSWERS:
Step by step
Solved in 3 steps with 2 images
