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...

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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?
Roton Inc. purchases merchandise on terms of 2/15, net 40, and its gross purchases (i.e., purchases before taking off the discount) are $525,000 per year. What is the maximum dollar amount of costly trade credit the firm could get, assuming it abides by the supplier's credit terms? (Assume a 365-day year.) Do not round intermediate calculations. Select one:
General Accounting
What is the effective annual percentage cost of its non-free trade credit?
7. Howes Inc. purchases $4,562,500 in goods per year from its sole supplier on terms of 2/15, net 50. If the firm chooses to pay on time but does not take the discount, what is the effective annual percentage cost of its non-free trade credit? (Assume a 365-day year.)
Bumpas Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 4/10, net 65. If the firm chooses to pay on time but does not take the discount, what is the effective annual percentage cost of its non-free trade credit? (Assume a 365-day year.) a. 21.98% b. 27.65% c. 29.49% d. 31.12% e. 28.46%
Zane Corporation has an inventory conversion period of 64 days,an average collection period of 28 days, and a payables deferral period of 41 days.a. What is the length of the cash conversion cycle?b. If Zane’s annual sales are $2,578,235 and all sales are on credit, what is the investmentin accounts receivable?c. How many times per year does Zane turn over its inventory? Assume that the cost ofgoods sold is 75% of sales. Use sales in the numerator to calculate the turnover ratio.
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 1.4/20, n/30, the cash discount available (assuming a 360-day year) is equivalent to an effective annual interest rate of O 63.2%. O 12.8%. O 1.4%. O 50.4%.