INTERMEDIATE ACCOUNTING
3rd Edition
ISBN: 9780136946694
Author: GORDON
Publisher: RENT PEARS
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Textbook Question
Chapter 8, Problem 8.21BE
Sales with the Right of Return. Both incorporated manufactures and sells processional ski equipment. Botti offers a money-back guarantee for one year after the date of purchase. Cash sales for the current year amounted to $620,000. Botti estimates that 5% of all sales are returned within the one-year period. Cost of goods sold is 75% of sales. The company uses a perpetual inventory system. Record sales and estimated sates returns for the current year.
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Cobb department store sells gift certificates redeemable only when merchandise is purchased. These gift certificates have an expiration date of two years after issuance date. Upon redemption or expiration, Cobb recognizes the unearned revenue as realized. Information for the current year is as follows:
Unearned revenue,1/1 650,000
Gift certificates sold 2,250,000
Gift certificates redeemed 1,950,000
Expired gift certificates 100,000
Cost of goods sold 60%
On Dec. 31, what amount should Cobb report as unearned revenue?
Roger Company completed the following transactions during Year 1. Roger’s fiscal year ends on December 31.
Jan.
8
Purchased merchandise for resale on account. The invoice amount was $14,780; assume a perpetual inventory system.
17
Paid January 8 invoice.
Apr.
1
Borrowed $54,000 from National Bank for general use; signed a 12-month, 10% annual interest-bearing note for the money.
June
3
Purchased merchandise for resale on account. The invoice amount was $17,420.
July
5
Paid June 3 invoice.
Aug.
1
Rented office space in one of Roger’s buildings to another company and collected six months’ rent in advance amounting to $6,000.
Dec.
20
Received a $180 deposit from a customer as a guarantee to return a trailer borrowed for 30 days.
31
Determined wages of $9,200 were earned but not yet paid on December 31 (disregard payroll taxes).
Show how all of the liabilities arising from these transactions are reported on the balance sheet at December 31.…
a. Record Navis, Incorporated's sales for a month at $75,000. The items sold cost $62,500. Navis records sales at the total invoice
amount.
b. Record the return of $7,500 of the above sales within the 30-day return period.
c. Record the receipt of payment on the remainder of the month's sales, assuming that customers purchasing $50,000 took
advantage of a 2 percent cash discount for early payment. None of the customers taking advantage of the cash discount were
among those that returned their purchases.
Complete this question by entering your answers in the tabs below.
Required A Required B Required C
Record the receipt of payment on the remainder of the month's sales, assuming that customers purchasing $50,000 took advantage of a
2 percent cash discount for early payment. None of the customers taking advantage of the cash discount were among those that
returned their purchases.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first…
Chapter 8 Solutions
INTERMEDIATE ACCOUNTING
Ch. 8 - What are the primary issues involved in revenue...Ch. 8 - What is the fundamental principle underlying the...Ch. 8 - What is the fundamental principle underlying the...Ch. 8 - Prob. 8.4QCh. 8 - Prob. 8.5QCh. 8 - How is a performance obligation defined?Ch. 8 - What are the two criteria to define a good or...Ch. 8 - Prob. 8.8QCh. 8 - What principles regarding timing and measurement...Ch. 8 - Prob. 8.10Q
Ch. 8 - What is variable consideration and what factors...Ch. 8 - Describe and contrast the two approaches used to...Ch. 8 - Prob. 8.13QCh. 8 - What factors should accountants consider to...Ch. 8 - Prob. 8.15QCh. 8 - How does a seller account for any consideration...Ch. 8 - Prob. 8.17QCh. 8 - What are the two exceptions to the general rule...Ch. 8 - What are the three criteria required to recognize...Ch. 8 - When an entity does not meet the three criteria...Ch. 8 - Prob. 8.21QCh. 8 - Prob. 8.22QCh. 8 - How does a firm estimate the degree completed...Ch. 8 - Can a firm record inventory out on consignment as...Ch. 8 - What method do agents in a transaction use to...Ch. 8 - Prob. 8.26QCh. 8 - What qualitative disclosures do the standards...Ch. 8 - All of the following are elements of a contract...Ch. 8 - Prob. 8.2MCCh. 8 - Telecom Co. enters into a two-year contract with a...Ch. 8 - The transaction price must reflect the time value...Ch. 8 - Prob. 8.5MCCh. 8 - When allocating the transaction price to separate...Ch. 8 - Which of the following indicators is not...Ch. 8 - During Yoar 1 Moriwothor Construction Company...Ch. 8 - All of the following are indicators that the...Ch. 8 - Prob. 8.10MCCh. 8 - Prob. 8.11MCCh. 8 - Identify a Contract with a Customer. Complete the...Ch. 8 - Prob. 8.2BECh. 8 - Identifying Performance Obligations. Perfect Party...Ch. 8 - Identifying Performance Obligations. Perfect Party...Ch. 8 - Estimating Variable Consideration. Gear Garage...Ch. 8 - Estimating Variable Consideration. Using the...Ch. 8 - Estimating Variable Consideration. Sellet...Ch. 8 - Estimating Variable Consideration. Seliet...Ch. 8 - Prob. 8.9BECh. 8 - Allocation of Transaction Price. Martin Software...Ch. 8 - Prob. 8.11BECh. 8 - Allocation of Transaction Price. Sycamore Sidewalk...Ch. 8 - Allocation of Transaction Price. Sycamore enters...Ch. 8 - Prob. 8.14BECh. 8 - Allocation of Transaction Price. Using the...Ch. 8 - When to Recognize Revenue. For each scenario...Ch. 8 - Prob. 8.17BECh. 8 - Prob. 8.18BECh. 8 - Prob. 8.19BECh. 8 - Prob. 8.20BECh. 8 - Sales with the Right of Return. Both incorporated...Ch. 8 - Sales with the Right of Return. Using the...Ch. 8 - Sales Returns. Historically, about 5% or the...Ch. 8 - Sales on Consignment. Hanna Lighting recertify...Ch. 8 - Determining Performance Obligations. Pagit Inc, a...Ch. 8 - Prob. 8.2ECh. 8 - Estimating Variable Consideration. King Rat Pest...Ch. 8 - Prob. 8.4ECh. 8 - Prob. 8.5ECh. 8 - Prob. 8.6ECh. 8 - Allocation of Variable Consideration. Green-Up Inc...Ch. 8 - Allocation of Variable Consideration. Green-Up Inc...Ch. 8 - Prob. 8.9ECh. 8 - Prob. 8.10ECh. 8 - Determination of When to Recognize Revenue. Far...Ch. 8 - Prob. 8.12ECh. 8 - Prob. 8.13ECh. 8 - Prob. 8.14ECh. 8 - Prob. 8.15ECh. 8 - Prob. 8.16ECh. 8 - Prob. 8.17ECh. 8 - Prob. 8.18ECh. 8 - Prob. 8.19ECh. 8 - Other Principal Agent Transactions, Net Revenue...Ch. 8 - Prob. 8.1PCh. 8 - Prob. 8.2PCh. 8 - Comprehensive Revenue Recognition Problem. Casale...Ch. 8 - Prob. 8.4PCh. 8 - Determining When to Recognize Revenue. Megrew...Ch. 8 - Prob. 8.6PCh. 8 - Prob. 8.7PCh. 8 - Prob. 8.8PCh. 8 - Prob. 8.9PCh. 8 - Prob. 8.10PCh. 8 - Prob. 8.11PCh. 8 - Prob. 8.12PCh. 8 - Prob. 1JCCh. 8 - Prob. 1FSCCh. 8 - Prob. 2FSCCh. 8 - Prob. 1SSCCh. 8 - Prob. 1BCC
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