refund liability a
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
Transcribed Image Text:Lacey Inc. manufactures hair products that it sells to multiple distributors. Lacey developed a new line of shampoo that it sold to distributors in
the month of July for $90,000 (cost of $45,000). If the distributors fail to sell the new product (shampoo), the product can be returned to Lacey
Inc. for a full refund. Because this is a new product line, Lacey is unable to estimate the amount of returns. No actual returns took place in July.
a. Determine revenue to be recognized during July.
b. Determine the balance in refund liability on July 31. $
90,000 x
0 x
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