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Lacey Inc. manufactures hair products that it sells to multiple distributors.

Lacey Inc. manufactures hair products that it sells to multiple distributors.

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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Lacey Inc. manufactures hair products that it sells to multiple distributors. Lacey developed a new line of shampoo that it sold to distributors in the month of July for $90,000 (cost of $45,000). If the distributors fail to sell the new product (shampoo), the product can be returned to Lacey Inc. for a full refund. Because this is a new product line, Lacey is unable to estimate the amount of returns. No actual returns took place in July. a. Determine revenue to be recognized during July. S b. Determine the balance in refund liability on July 31. $
Transcribed Image Text:Lacey Inc. manufactures hair products that it sells to multiple distributors. Lacey developed a new line of shampoo that it sold to distributors in the month of July for $90,000 (cost of $45,000). If the distributors fail to sell the new product (shampoo), the product can be returned to Lacey Inc. for a full refund. Because this is a new product line, Lacey is unable to estimate the amount of returns. No actual returns took place in July. a. Determine revenue to be recognized during July. S b. Determine the balance in refund liability on July 31. $
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