To promote the sale of some specialty goods, Shamrock Ltd. began a generous return policy for its customers. Customers can return merchandise for up to three months following the date of the invoice, no questions asked. For the current period, sales of these specialty goods totalled $35,900. Shamrock chooses to estimate any expected sales returns at the end of each reporting period, rather than recording the Refund Liability at the point of sale. At the end of the reporting period, Shamrock estimates that outstanding returns will be $2,700. Assuming Shamrock follows IFRS, prepare the required adjusting journal entry at the end of the reporting period. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Refund Liability Debit Credit

To promote the sale of some specialty goods, Shamrock Ltd. began a generous return policy for its customers. Customers can return merchandise for up to three months following the date of the invoice, no questions asked. For the current period, sales of these specialty goods totalled $35,900. Shamrock chooses to estimate any expected sales returns at the end of each reporting period, rather than recording the Refund Liability at the point of sale. At the end of the reporting period, Shamrock estimates that outstanding returns will be $2,700. Assuming Shamrock follows IFRS, prepare the required adjusting journal entry at the end of the reporting period. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Refund Liability Debit Credit

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter14: Adjustments For A Merchandising Business

Section: Chapter Questions

Problem 1CP: Block Foods, a retail grocery store, has agreed to purchase all of its merchandise from Square...

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Douglas Corporation reports it sold merchandise on account for a total of $800,000 for the current year. The cost to Douglas for the merchandise was $300,000. To encourage early payment, Douglas offers its customers credit terms of 1/10, n/30. At year-end, there is $150,000 of sales on account still eligible for the 1 percent discount. Douglas believes that all customers will pay within the discount period to receive the discount. Prepare the adjusting journal entry needed for Douglas Corporation to comply with the new revenue recognition standard. Assume Douglas’s fiscal year-end is December 31.
Chico Company allows its customers to return merchandise within 30 days of purchase. *At December 31, the end of its first year of operations, Chico estimates future-period merchandise returns of $60000 (cost of $22500) related to it's current year sales. *A few days later, on January 3, a customer returns merchandise with a selling price of $2000 for a cash refund; the returned merchandise cost $750 and is returned to inventory as it is not defective. a.Prepare the December 31 year -end adjusting journal entry for estimated future sales returns and allowances (revenue side). b.Prepare the December 31 year-end adjusting journal entry for estimated future inventory returns and allowances (cost side). c.Prepare the January 3 journal entries to record the merchandise returned.
Heller Company offers an unconditional return policy to its customers. During the current period, the company records total sales of $935,000, with a cost of merchandise to Heller of $374,000. Based on past experience, Heller Company expects 4% of sales to be returned. How much in net sales will Heller Company recognize for the current period?
Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax’s sales are for credit (no cash is collected at the time of sale). The company began 2021 with a refund liability of $300,000. During 2021, Halifax sold merchandise on account for $11,500,000. Halifax's merchandise costs is 65% of merchandise selling price. Also during the year, customers returned $450,000 in sales for credit, with $250,000 of those being returns of merchandise sold prior to 2021, and the rest being merchandise sold during 2021. Sales returns, estimated to be 4% of sales, are recorded as an adjusting entry at the end of the year.Required:1. Prepare entries to (a) record actual returns in 2021 of merchandise that was sold prior to 2021; (b) record actual returns in 2021 of merchandise that was sold during 2021; and (c) adjust the refund liability to its appropriate balance at year end.2. What is the amount of…
Metro Company sells lawn and garden products to wholesalers. The company’s fiscal year-end is December 31. During 2020, the following transactions related to receivables occurred: 2/28 Sold merchandise to Lennox, Inc., for $10,000 and accepted a 10%, 7-month note. 10% is an appropriate rate for this type of note. 3/31 Sold merchandise to Maddox Co. and accepted a noninterest-bearing note with a discount rate of 10%. The $8,000 payment is due on March 31, 2019. 4/3 Sold merchandise to Carr Co. for $7,000 with terms 2/10, n/30. Metro uses the gross method to account for cash discounts. 4/11 Collected the entire amount due from Carr Co. 6/30 Discounted the Lennox, Inc., note at the bank. The bank’s discount rate is 12%. The note was discounted without recourse. 12/31 An adjusting entry is recorded for the Maddox note .Required: Prepare the necessary journal entries for Metro for each of the above dates. For transactions involving…
Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2024 with a refund llability of $390,000. During 2024, Halifax sold merchandise on account for $12,400,000. Halifax's merchandise costs are 65% of merchandise selling price. Also during the year, customers returned $368,000 in sales for credit, with $203,000 of those being returns of merchandise sold prior to 2024, and the rest being merchandise sold during 2024. Sales returns, estimated to be 3% of sales, are recorded as an adjusting entry at the end of the year. Required: 1. Prepare entries to (a) record actual returns in 2024 of merchandise that was sold prior to 2024; (b) record actual returns in 2024 of merchandise that was sold during 2024; and (c) adjust the refund liability to its appropriate balance at year end. 2. What is the…
MN Plc's draft statement of profit or loss for the year ended 31 March 20X8 includes GHS8m of revenue for credit sales made on a 'sale or return' basis. At 31 March 20X8 customers who had not yet paid had the right to return goods to the value of GHS2.6m. MN Plc applied a mark-up on cost of 30% on all of these sales. MN Plc's customers have in the past returned goods under this type of agreement. By what amount should MN Plc's profit for the year ended 31 March 20X8 be reduced in respect of this? A. GHS2,600,000 B. GHS780,000 C. GHS600,000 D. GHS2,400,000
Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2018 with a refund liability of $390,000. During 2018, Halifax sold merchandise on account for $13,300,000. Halifax's merchandise costs it 65% of merchandise selling price. Also during the year, customers returned $386,000 in sales for credit, with $213,000 of those being returns of merchandise sold prior to 2018, and the rest being merchandise sold during 2018. Sales returns, estimated to be 3% of sales, are recorded as an adjusting entry at the end of the year. Record the year-end adjusting entry for estimated returns. Please don't provide answer in image format thank you
Evergreen Company sells lawn and garden products to wholesalers. The company’s fiscal year-end is December 31. During 2021, the following transactions related to receivables occurred: Feb. 28 Sold merchandise to Lennox, Inc., for $10,000 and accepted a 10%, 7-month note. 10% is an appropriate rate for this type of note. Mar. 31 Sold merchandise to Maddox Co. that had a fair value of $7,200, and accepted a noninterest-bearing note for which $8,000 payment is due on March 31, 2022. Apr. 3 Sold merchandise to Carr Co. for $7,000 with terms 2/10, n/30. Evergreen uses the gross method to account for cash discounts. 11 Collected the entire amount due from Carr Co. 17 A customer returned merchandise costing $3,200. Evergreen reduced the customer’s receivable balance by $5,000, the sales price of the merchandise. Sales returns are recorded by the company as they occur. 30 Transferred receivables of $50,000 to a factor without recourse. The factor…
James Company has an arrangement with with Jorge Company that operates a customer loyalty program. The entity grants loyalty points of Jorge Company when they spend a specified amount on purchases. Program members can redeem their points with Jorge Company. The points have no expiry date. During 2020, the customers earned 60,000 points. The stand-alone selling price of each loyalty point is estimated at P20. The sales during 2020 amounted to P6,800,000 based on stand-alone selling price. According to Jorge Company: On December 31, 2020, 28,800 points have been redeemed in exchange for purchases. In 2021, customers have redeemed 9,000 points. How much is the initial unearned customer loyalty points to be recognized by James?
James Company has an arrangement with with Jorge Company that operates a customer loyalty program. The entity grants loyalty points of Jorge Company when they spend a specified amount on purchases. Program members can redeem their points with Jorge Company. The points have no expiry date. During 2020, the customers earned 60,000 points. The stand-alone selling price of each loyalty point is estimated at P20. The sales during 2020 amounted to P6,800,000 based on stand-alone selling price. According to Jorge Company: On December 31, 2020, 28,800 points have been redeemed in exchange for purchases. In 2021, customers have redeemed 9,000 points. How much is the revenue to be recognized by James in 2020?