On April 2, 2024, Wildhorse 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 Wildhorse $22,000. Wildhorse has a stated return policy that goods may be returned within 30 days. The medication was shipped on April 10, 2024. Wildhorse'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 will most likely pay within the discount period. Wildhorse uses the contract- based approach for revenue recognition.
On April 2, 2024, Wildhorse 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 Wildhorse $22,000. Wildhorse has a stated return policy that goods may be returned within 30 days. The medication was shipped on April 10, 2024. Wildhorse'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 will most likely pay within the discount period. Wildhorse uses the contract- based approach for revenue recognition.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:On April 2, 2024, Wildhorse 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 Wildhorse
$22,000. Wildhorse has a stated return
policy that goods may be returned within
30 days. The medication was shipped on
April 10, 2024. Wildhorse'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
will most likely pay within the discount
period. Wildhorse uses the contract-
based approach for revenue recognition.
Calculate the transaction price please.
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