ModCloth, Inc. offers an unconditional return policy. It normally expects 2% of sales at retail selling prices to be returned before the return period expires. Assuming that ModCloth records total sales of $10 million for the current period, what amount of net sales should it record for this period?

ModCloth, Inc. offers an unconditional return policy. It normally expects 2% of sales at retail selling prices to be returned before the return period expires. Assuming that ModCloth records total sales of $10 million for the current period, what amount of net sales should it record for this period?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter21: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 11P: Negus Enterprises has an inventory conversion period of 50 days, an average collection period of 35...

See similar textbooks

Similar questions

Amount of net sales should be
M5-17. Estimating Revenue Recognition with Right of Return ModCloth Inc. offers an unconditional return policy. It normally expects 2% of sales at retail selling prices to be returned before the return period expires. Assuming ModCloth records total sales of $10 million for the current period, what amount of net sales should it record for this period?
Heller Company offers an unconditional return policy to its customers. During the current period, the company records total sales of $935,000, with a cost of merchandise to Heller of $374,000. Based on past experience, Heller Company expects 4% of sales to be returned. How much in net sales will Heller Company recognize for the current period?
An entity was offering premium as a sales promotion scheme and that during the year it purchased 10,000 premiums for P20 each. Customers need to remit 10 boxes and P5 to redeem one premium. Assume there were no redemptions during the first year of the promotion, which of the following statements would be correct if it uses the revenue approach? a. The entity will report an inventory of premiums at the net cost of P15. Tb. he entity will report an estimated liability equal to the premium expense. c. None of the other choices are correct. Td. he entity will not report any expense since there were no redemption. e. No accounting liability shall be recognized since there were no redemptions.
If a company purchases merchandise on terms of 2.7/10, n/30, the cash discount available (assuming a 360-day year) is equivalent to an effective annual interest rate of
or each of the separate revenue contract scenarios 1 through 5, (a) measure the transaction price and (b) determine whether the transaction price is fixed, variable, or some combination of both. 1. Loyola Inc. sells $70,000 of inventory during the year to customers for $140,000. Loyola Inc. accepts returns up to 3 months after the date of purchase. Loyola estimates returns to be 6% of sales. a. Transaction price Answer b. Variable consideration Answer Fixed consideration Answer 2. Nakoma Corp. sells product offering a retroactive volume discount on certain cumulative sales volumes as follows: 0 to 500 units cost $10 each; 501 to 1,000 units cost $9 each; 1,001 units and beyond cost $8 each. For Nakoma’s largest customer, Nakoma estimates the likelihood of cumulative purchases for the year as follows: 15% for 400 units, 50% for 800 units, and 35% for 1,200 units. The revenue contract stipulates that the price per unit of product will be adjusted retroactively once…
Tauros Company’s usual sales terms are net 60 days, FOB Shipping point. Sales, net of returns and allowances, totaled P2,300,000 for the year ended December 31, 2022, before year-end adjustments. Additional data are as follows: · On December 27, 2022, Taurus authorized a customer to return, for full credit, goods shipped and billed at P50,000 on December 15, 2022. The returned goods were received by Taurus on January 4, 2023, and a P50,000 credit memo was issued and recorded on the same date. · Goods with an invoice amount of P80,000 were billed and recorded on January 3, 2023. The goods were shipped on December 30, 2022. · Goods with an invoice amount of P100,000 were billed and recorded on December 30, 2022. The goods were shipped on January 3, 2023. The adjusted net sales for 2022 should be? a. 2,300,000b. 2,250,000c. 2,230,000d. 2,070,000
Chico Company allows its customers to return merchandise within 30 days of purchase. ∙ At December 31, the end of its first year of operations, Chico estimates future-period merchandise returns of $60,000 (cost of $22,500) related to its current-year sales. ∙ A few days later, on January 3, a customer returns merchandise with a selling price of $2,000 for a cash refund; the returned merchandise cost $750 and is returned to inventory as it is not defective. a. Prepare the December 31 year-end adjusting journal entry for estimated future sales returns and allowances (revenue side). b. Prepare the December 31 year-end adjusting journal entry for estimated future inventory returns and allowances (cost side). c. Prepare the January 3 journal entries to record the merchandise returned.
In June 2022, Gold Tempo Retailers sold refundable merchandise coupons. Gold Tempo received P10 for each coupon redeemable from July 1 to December 31, 2022 for merchandise with a retail price of P11. At June 30, 2022, how should Gold Tempo report these coupon transactions? A. Unearned revenues at the merchandise’s retail price B. Unearned revenues at the amount of cash received C. Revenues at the merchandise’s retail price D. Revenues at the amount of cash received
Ore
Blossom Company purchased merchandise with an invoice price of $3400 and credit terms of 2/8, n/30. Assuming a 360-day year, what is the implied annual interest rate inherent in the credit terms?
Kingbird, Inc. purchased merchandise with an invoice price of $3600 and credit terms of 3/12, n/30. Assuming a 360-day year, what is the implied annual interest rate inherent in the credit terms? 40% 3% 6% 60%