Answered: Shatner Importers, Inc. sells coffee…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Shatner Importers, Inc. sells coffee pots for $120 each. On November 12, the company sold to a customer on account with terms of /15, n/30. The customer paid for 20 of the coffee pots on November 27 and paid for the remaining on 11th.

Provide the necessary journal entries for Shatner to record these transactions under both the most-likely-amount and expected-value methods. For the most-likely-amount method, assume both that the customer will take the discount and won't take the discount. For the expected-value approach, assume that the customer is70% likely to take the discount and ignore any constraints on variable consideration. (Ignore the journal entry that would typically be necessary to record the reduction of inventory and cost of goods sold.) Round to two decimal places.
b. Provide a comparison of the impact on the income statement for each method.

begin by recording the transactions under the most-likely-amount method, assuming that the customer will take the discount. (Record debits first, then credits. Exclude explanations from any journal entries.)

Nov. 12: The company sold 60 coffee pots to a customer on account with terms of 3/15, n/30.

Account	November 12

Part 2

Nov. 27: The customer paid for 20 of the coffee pots.

Account	November 27

Part 3

Dec. 11: The customer paid for the remaining 40 coffee pots.

Account	December 11

part 4

Now record the transactions under the most-likely-amount method, assuming that the customer won't take the discount. (Record debits first, then credits. Exclude explanations from any journal entries.)

Nov. 12: The company sold 60 coffee pots to a customer on account with terms of 3/15, n/30.

Account	November 12

Part 5

Nov. 27: The customer paid for 20 of the coffee pots.

Account	November 27

Part 6

Dec. 11: The customer paid for the remaining 40 coffee pots.

Account	December 11

Part 7

Finally, record the transactions under the expected-value method. (Record debits first, then credits. Exclude explanations from any journal entries. Round intermediary calculations and your final answers to the nearest cent.)

Nov. 12: The company sold 60 coffee pots to a customer on account with terms of 3/15, n/30.