M5-17. Estimating Revenue Recognition with Right of ReturnModCloth Inc. offers an unconditional return policy. It normally expects 2% of sales at retail sellingprices to be returned before the return period expires. Assuming ModCloth records total sales of $10million for the current period, what amount of net sales should it record for this period?

The net sales are used for determining the net income or loss during a period. Net sales are…

Answered: M5-17. Estimating Revenue Recognition…

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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Below is a major portion of the income statements of KTA Inc. for 2020 and 2021: Sales Cost of Sales Gross Margin 2020 P80,000 50,000 P30,000 2021 P97,200 72,000 P25,200 The firm sold its sole product for P8/unit during 2020. Even though the sales units increased by 20% during 2021, the gross margin declined. Disappointed with the results, the owner asked for your assistance in analyzing the cause of the gross margin decline. Percentage increase (decrease) in unit cost. A. 20% C. (44%) B. (20%) D. 44%
Until recently, Augean Cleaning Products sold its products on terms of net 70, with an average collection period of 85 days. In an attempt to induce customers to pay more promptly, it has changed its terms to 1/10, EOM, net 70. Assume current sales of $100, costs of $90, an interest rate of 12%, and no defaults. Assume each month has 30 days and a year has 360 days. The initial effect of the changed terms is as follows: Percent of Sales with Cash Discount 70 Average Collection Periods (Days) Cash Discount 40a Net present value Net 90 Some customers deduct the cash discount even though they pay after the specified date. a. Calculate the NPV per $100 of sales based on the original terms. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
For 2022 Amaya's Soul Food Catering had total sales of $597,341; sales returns and allowances of $10,514; beginning inventory costs of $38,917; cost of purchases, $261, 053; and year-end inventory of $42,013. Rounded to the nearest dollar (i.e. 12), what are their Net Sales? A • Rounded to the nearest dollar (i.e. 12), what is their Cost of Goods Sold? A • Rounded to the nearest dollar (i.e. 12), what is their Gross Profit? A/

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