P18-8 (LO2,3) (Time Value, Gift Cards, Discounts) Presented below are two independent revenue arrangements for Colbert Company. Instructions Respond to the requirements related to each revenue arrangement. (a) Colbert sells 3D printer systems. Recently, Colbert provided a special promotion of zero-interest financing for 2 years on any new 3D printer system. Assume that Colbert sells Lyle Cartright a 3D system, receiving a $5,000 zero-interest- bearing note on January 1, 2017. The cost of the 3D printer system is $4,000. Colbert imputes a 6% interest rate on this zero-interest note transaction. Prepare the journal entry to record the sale on January 1, 2017, and compute the total amount of revenue to be recognized in 2017. (b) Colbert sells 20 nonrefundable $100 gift cards for 3D printer paper on March 1, 2017. The paper has a standalone selling price of $100 (cost $80). The gift cards expiration date is June 30, 2017. Colbert estimates that customers will not redeem 10% of these gift cards. The pattern of redemption is as follows. Redemption Total March 31 50% April 30 June 30 80 85 Prepare the 2017 journal entries related to the gift cards at March 1, March 31, April 30, and June 30.

P18-8 (LO2,3) (Time Value, Gift Cards, Discounts) Presented below are two independent revenue arrangements for Colbert Company. Instructions Respond to the requirements related to each revenue arrangement. (a) Colbert sells 3D printer systems. Recently, Colbert provided a special promotion of zero-interest financing for 2 years on any new 3D printer system. Assume that Colbert sells Lyle Cartright a 3D system, receiving a $5,000 zero-interest- bearing note on January 1, 2017. The cost of the 3D printer system is $4,000. Colbert imputes a 6% interest rate on this zero-interest note transaction. Prepare the journal entry to record the sale on January 1, 2017, and compute the total amount of revenue to be recognized in 2017. (b) Colbert sells 20 nonrefundable $100 gift cards for 3D printer paper on March 1, 2017. The paper has a standalone selling price of $100 (cost $80). The gift cards expiration date is June 30, 2017. Colbert estimates that customers will not redeem 10% of these gift cards. The pattern of redemption is as follows. Redemption Total March 31 50% April 30 June 30 80 85 Prepare the 2017 journal entries related to the gift cards at March 1, March 31, April 30, and June 30.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 24E: Spath Company borrows 75,000 by issuing a 4-year, noninterest-bearing note to a customer on January...

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N1. Account