Botanic Choice sells natural supplements to customers with an unconditional sales return if they are not satisfied. The sales returns period extends 60 days. On February 10, 2024, a customer purchases $12,000 of products (cost $8,000). Assuming that based on prior experience, estimated returns are 30%. The journal entry to record the estimated return of merchandise includes a

Botanic Choice sells natural supplements to customers with an unconditional sales return if they are not satisfied. The sales returns period extends 60 days. On February 10, 2024, a customer purchases $12,000 of products (cost $8,000). Assuming that based on prior experience, estimated returns are 30%. The journal entry to record the estimated return of merchandise includes a

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter7: Budgeting

Section: Chapter Questions

Problem 14EB: Earthies Shoes has 55% of its sales in cash and the remainder on credit. Of the credit sales, 70% is...

See similar textbooks

Similar questions

Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is 30. The cost of holding one unit of inventory for one year is 15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Required: 1. Compute the annual ordering cost. 2. Compute the annual carrying cost. 3. Compute the cost of Ottiss current inventory policy. Is this the minimum cost? Why or why not?
Deuce Sporting Goods manufactures a high-end model tennis racket. The company’s forecasted income statement for the year, before any special orders, is as follows: Fixed costs included in the forecasted income statement are $400,000 in manufacturing cost of goods sold and $200,000 in selling expenses. A new client placed a special order with Deuce, offering to buy 1,000 tennis rackets for $100.00 each. The company will incur no additional selling expenses if it accepts the special order. Assuming that Deuce has sufficient capacity to manufacture 1,000 more tennis rackets, by what amount would differential income increase (decrease) as a result of accepting the special order? (Hint: First compute the variable cost per unit relevant to this decision.)
Earthies Shoes has 55% of its sales in cash and the remainder on credit. Of the credit sales, 70% is collected in the month of sale, 15% is collected the month after the sale, and 10% is collected the second month after the sale. How much cash will be collected in June if sales are estimated as $75,000 in April, $65,000 in May, and $90,000 in June?
ClipClop Company sells horseshoes to customers at a discount of 4% if the customer orders more than 10,000 horseshoes in a year. The price per shoe is $2. In April, Oats Company orders 4,000 horseshoes from ClipClop. Based on past experience with Oats Company, ClipClop expects Oats to meet the volume threshold of 10,000 horseshoes by the end of the year. What amount of revenue should ClipClop record in connection with the April sale? $7,680 $20,000 $0 because ClipClop does not know if Oats will meet the volume discount threshold $8,000
A home gods retailer offers a sales incentive program where customers receive credit towards future purchases based on the dollar amount of their purchases today. For every $10 spent, a customer receives a $1 credit to use in the next 30 days. Based upon historical trends, the firm estimates that 35% of the credits will be redeemed. Assume the credit associated with the sales incentive program is a separate performance obligation. If during the month the company sold $40,000 of product with a cost of $22,000, what is amount of revenue allocated to product sales? Round to the nearest dollar. $29,630 $36,364 $38,647 $40,000 None of the above
Bridgeport Publishing Co. publishes college textbooks that are sold to bookstores on the following terms. Each title has a fixed wholesale price, terms f.o.b. shipping point, and payment is due 60 days after shipment. The retailer may return a maximum of 30% of an order at the retailer’s expense. Sales are made only to retailers who have good credit ratings. Past experience indicates that the normal return rate is 12%. The costs of recovery are expected to be immaterial, and the textbooks are expected to be resold at a profit. On July 1, 2020, Bridgeport shipped books invoiced at $15,100,000 (cost $12,080,000). Prepare the journal entry to record this transaction. (Credit account titles are automatically indented when amount is entered. Do not indent manually.If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit (To recognize revenue.)…
Sweet Publishing Co. publishes college textbooks that are sold to bookstores on the following terms. Each title has a fixed wholesale price, terms f.o.b. shipping point, and payment is due 60 days after shipment. The retailer may return a maximum of 30% of an order at the retailer’s expense. Sales are made only to retailers who have good credit ratings. Past experience indicates that the normal return rate is 12%. The costs of recovery are expected to be immaterial, and the textbooks are expected to be resold at a profit. Assume Sweet prepares financial statements on October 31, 2020, the close of the fiscal year. No other returns are anticipated. Indicate the amounts reported on the income statement and balance related to the above transactions.
integrity inc. sells computor training packages to its business customers at a price of $91 the cost of production (in present value term) is $87, integrity sells its packages om term of net 30 and estimated that about 8% of all orders will be uncollectible an oder in for 25 units the interest rate is 0.6% per month given the above information Present value of revenue is? The expected profit from a sale is? If this is a one time Order and the sale will be made unless credit is expected the firm (should not) extend credit the break even probability of collection is ?% No suppose that if a customer pays the months bill it will place an identical order in each month indefinitely and can be safely assume to pose no risk of default in this case since the present value of the perpetuity of profit is? And the present value of sale is ? The credit should be extended the break even point probability of collection in the repeat- sales is
Uddin Publishing Co. publishes college textbooks that are sold to bookstores on the following terms. Each title has a fixed wholesale price, terms f.o.b. shipping point, and payment is due 60 days after shipment. The retailer may return a maximum of 30% of an order at the retailer's expense. Sales are made only to retailers who have good credit ratings. Past experience indicates that the normal return rate is 12%. The costs of recovery are expected to be immaterial, and the textbooks are expected to be resold at a profit. Instructions a. Identify the revenue recognition criteria that Uddin could employ concerning textbook sales. b. Briefly discuss the reasoning for your answers in (a) above. c. On July 1, 2020, Uddin shipped books invoiced at $15,000,000 (cost $12,000,000). Prepare the journal entry to record this transaction. d. On October 3, 2020, $1.5 million of the invoiced July sales were returned according to the return policy, and the remaining $13.5 million was…
In January 2020, a retailer sells 100 paper shredders to customers for $100 each. The terms of the sales include a right for the customer to return a shredder within 180 days of the sale date. Based on historical trends, the retailer uses the expected value method and estimates a 40% probability that 8 paper shredders will be returned, a 45% probability that 9 paper shredders will be returned, and a 15% probability that 12 paper shredders will be returned. The retailer also concludes it is highly probable that there will not be a significant reversal of revenue recognized based on this return estimate. Thus, the agreement is a valid contract. Assume no actual returns in January 2020. Determine (1) the transaction price for the sale of shredders for January 2020, and (2) the refund liability balance on January 31, 2020. Round expected returns to the nearest whole unit in your calculations.
In an effort to increase sales, Alabama Company inaugurated a sales promotional campaign on June 30, 2022. The company placed a coupon redeemable for a plushy in each package of cereal sold. To receive a premium, a customer must present five (5) coupons. Each plushy cost the firm P20, while it can be sold by Alabama for P50 each. The company estimates that only 45% of the coupons issued will not be redeemed. For the six months ended December 31, 2022, the following information are available: Packages of cereal sold 170,000 Selling price per box of cereal P100 Plushies purchased 25,000 Coupons actually redeemed 80,000 (a) How much is the premium expense for the year ended December 31, 2022? (b) How much is the estimated liability for premium claims as of December 31, 2022? (c) How much is the inventory of premium items as of December 31, 2022?
Martz Inc. has a customer loyalty program that rewards a customer with 1 customer loyalty point for every $10 of purchases. Each point is redeemable for a $3 discount on any future purchases. On July 2, 2020, customers purchase products for $300,000 (with a cost of $171,000) and earn 30,000 points redeemable for future purchases. Martz expects 25,000 points to be redeemed. Martz estimates a standalone selling price of $2.50 per point (or $75,000 total) on the basis of the likelihood of redemption. The points provide a material right to customers that they would not receive without entering into a contract. As a result, Martz concludes that the points are a separate performance obligation. Instructions a. Determine the transaction price for the product and the customer loyalty points. b. Prepare the journal entries to record the sale of the product and related points on July 2, 2020. c. At the end of the first reporting period (July 31, 2020), 10,000 loyalty points are…