Make only correct Jornal entry Prepare journal entries to recognize revenue on the appropriate date. (Hint: The expected value method is also used to determinethe amount for cost of goods sold and estimated inventory returns.) (Credit account titles are automatically indented when theamount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "NoEntry" for the account titles and enter O for the amounts.)Account Titles and ExplanationDebitCreditAccounts Receivable50,000Refund Liability5,250Sales44,750(To record sales on account.)Cost of Goods Sold17,900Estimated Inventory Returns2,100Merchandise Inventory20,000(To record cost of goods sold.) On April 2, 2021, Cullumber Company entered into a contract to supply medication to Laxall Drug Stores, FOB shipping point, terms2/30, n/45. The selling price of the medication is $50,000 and the medication cost Cullumber Company $20,000. Cullumber has astated return policy that goods may be returned within 30 days. The medication was shipped on April 10, 2021. Cullumber'smanagement estimates returns using the expected value method and sales discounts are estimated using the most likely outcome.Based on past experience with this product, returns are 5% of sales 50% of the time, 10% of sales 20% of the time, and 20% of sales30% of the time. Laxall Drug Stores will most likely pay within the discount period. Cullumber Company uses the contract-basedapproach for revenue recognition.

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On April 2, 2021, Cullumber Company entered into a contract to supply medication to Laxall Drug Stores, FOB shipping point, terms 2/30, n/45. The selling price of the medication is $50,000 and the medication cost Cullumber Company $20,000. Cullumber has a stated return policy that goods may be returned within 30 days. The medication was shipped on April 10, 2021. Cullumber's management estimates returns using the expected value method and sales discounts are estimated using the most likely outcome. Based on past experience with this product, returns are 5% of sales 50% of the time, 10% of sales 20% of the time, and 20% of sales 30% of the time. Laxall Drug Stores will most likely pay within the discount period. Cullumber Company uses the contract-based approach for revenue recognition.

On April 2, 2021, Cullumber Company entered into a contract to supply medication to Laxall Drug Stores, FOB shipping point, terms 2/30, n/45. The selling price of the medication is $50,000 and the medication cost Cullumber Company $20,000. Cullumber has a stated return policy that goods may be returned within 30 days. The medication was shipped on April 10, 2021. Cullumber's management estimates returns using the expected value method and sales discounts are estimated using the most likely outcome. Based on past experience with this product, returns are 5% of sales 50% of the time, 10% of sales 20% of the time, and 20% of sales 30% of the time. Laxall Drug Stores will most likely pay within the discount period. Cullumber Company uses the contract-based approach for 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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