On March 10, 2020, Steele Company sold to Barr Hardware 200 tool sets at a price of $50 each (cost $30 per set) with terms of n/60, f.o.b. shipping point. Steele allows Barr to return any unused tool sets within 60 days of purchase. Steele estimates that (1) 10 sets will be returned, (2) the cost of recovering the products will be immaterial, and (3) the returned tools sets can be resold at a profit. On March 25, 2020, Barr returned six tool sets and received a credit to its account. Instructions a. Prepare journal entries for Steele to record (1) the sale on March 10, 2020, (2) the return on March 25, 2020, and (c) any adjusting entries required on March 31, 2020 (when Steele prepares financial statements). Steele believes the original estimate of returns is correct. b. Indicate the income statement and balance sheet reporting by Steele at March 31, 2020, of the information related to the Barr sales transaction. . Assume that instead of selling the tool sets on credit, that Steele sold them for cash.
On March 10, 2020, Steele Company sold to Barr Hardware 200 tool sets at a price of $50 each (cost $30 per set) with terms of n/60, f.o.b. shipping point. Steele allows Barr to return any unused tool sets within 60 days of purchase. Steele estimates that (1) 10 sets will be returned, (2) the cost of recovering the products will be immaterial, and (3) the returned tools sets can be resold at a profit. On March 25, 2020, Barr returned six tool sets and received a credit to its account. Instructions a. Prepare journal entries for Steele to record (1) the sale on March 10, 2020, (2) the return on March 25, 2020, and (c) any adjusting entries required on March 31, 2020 (when Steele prepares financial statements). Steele believes the original estimate of returns is correct. b. Indicate the income statement and balance sheet reporting by Steele at March 31, 2020, of the information related to the Barr sales transaction. . Assume that instead of selling the tool sets on credit, that Steele sold them for cash.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:On March 10, 2020, Steele Company sold to Barr Hardware 200 tool sets at a price of $50 each (cost $30 per set)
with terms of n/60, f.o.b. shipping point. Steele allows Barr to return any unused tool sets within 60 days of
purchase. Steele estimates that (1) 10 sets will be returned, (2) the cost of recovering the products will be
immaterial, and (3) the returned tools sets can be resold at a profit. On March 25, 2020, Barr returned six tool
sets and received a credit to its account.
Instructions
a. Prepare journal entries for Steele to record (1) the sale on March 10, 2020, (2) the return on March 25, 2020,
and (c) any adjusting entries required on March 31, 2020 (when Steele prepares financial statements). Steele
believes the original estimate of returns is correct.
b. Indicate the income statement and balance sheet reporting by Steele at March 31, 2020, of the information
related to the Barr sales transaction.
. Assume that instead of selling the tool sets on credit, that Steele sold them for cash.
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