On March 10, 2020, Stellar Company sold to Barr Hardware 230 tool sets at a price of $54 each (cost $28 per set) with terms of n/60, f.o.b. shipping point. Stellar allows Barr to return any unused tool sets within 60 days of purchase. Stellar 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 6 tool sets and received a credit to its account. Assume that instead of selling the tool sets on credit, that Stellar sold them for cash.
On March 10, 2020, Stellar Company sold to Barr Hardware 230 tool sets at a price of $54 each (cost $28 per set) with terms of n/60, f.o.b. shipping point. Stellar allows Barr to return any unused tool sets within 60 days of purchase. Stellar 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 6 tool sets and received a credit to its account. Assume that instead of selling the tool sets on credit, that Stellar sold them for cash.
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter5: Accounting For Retail Businesses
Section: Chapter Questions
Problem 40E: Identify items missing in determining cost of goods sold For (a) through (e), identify the items...
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On March 10, 2020, Stellar Company sold to Barr Hardware 230 tool sets at a price of $54 each (cost $28 per set) with terms of n/60, f.o.b. shipping point. Stellar allows Barr to return any unused tool sets within 60 days of purchase. Stellar 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 6 tool sets and received a credit to its account. Assume that instead of selling the tool sets on credit, that Stellar sold them for cash.
![Indicate the income statement and balance sheet reporting by Stellar at March 31, 2020, of the information related to the Barr
sales. (List Assets in order of liquidity.)
Income Statement (partial)
For the Quarter Ended March 31, 2020
Sales Revenue
12420
Less
Sales Returns and Allowances
540 i
Net Sales
11880
Cost of Goods Sold
6160
i
Gross profit
24
5720
Balance Sheet (partial)
March 31, 2020
Accounts Receivable
12096
Allowance for Sales Returns and Allowances
216
Inventory
280
%24](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F434d2269-4f3a-4f4c-8063-acd88b866aa7%2F76835bbd-3feb-4300-87a5-f22cc2bb89e1%2Fbyya07h_processed.png&w=3840&q=75)
Transcribed Image Text:Indicate the income statement and balance sheet reporting by Stellar at March 31, 2020, of the information related to the Barr
sales. (List Assets in order of liquidity.)
Income Statement (partial)
For the Quarter Ended March 31, 2020
Sales Revenue
12420
Less
Sales Returns and Allowances
540 i
Net Sales
11880
Cost of Goods Sold
6160
i
Gross profit
24
5720
Balance Sheet (partial)
March 31, 2020
Accounts Receivable
12096
Allowance for Sales Returns and Allowances
216
Inventory
280
%24
![No. Account Titles and Explanation
Debit
Credit
(1)
Cash
12420
Sales Revenue
12420
(To record cash sales)
Cost of Goods Sold
6440
Inventory
6440
(To record cost of goods sold)
(2)
Sales Returns and Allowances
324
Accounts Payable
324
(To record sales returns)
Returned Inventory
168
Cost of Goods Sold
168
(To record cost of goods returned)
(3)
Sales Returns and Allowances
216
Accounts Payable
216
(Adjusting entry for sales returns)
Estimated Inventory Returns
112
Cost of Goods Sold
112
IA diusting ontru for coct of soods sold)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F434d2269-4f3a-4f4c-8063-acd88b866aa7%2F76835bbd-3feb-4300-87a5-f22cc2bb89e1%2Fjrz0s98_processed.png&w=3840&q=75)
Transcribed Image Text:No. Account Titles and Explanation
Debit
Credit
(1)
Cash
12420
Sales Revenue
12420
(To record cash sales)
Cost of Goods Sold
6440
Inventory
6440
(To record cost of goods sold)
(2)
Sales Returns and Allowances
324
Accounts Payable
324
(To record sales returns)
Returned Inventory
168
Cost of Goods Sold
168
(To record cost of goods returned)
(3)
Sales Returns and Allowances
216
Accounts Payable
216
(Adjusting entry for sales returns)
Estimated Inventory Returns
112
Cost of Goods Sold
112
IA diusting ontru for coct of soods sold)
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