On July 10, 2020, Bonita Ltd. sold GPS systems to retailers on account for a selling price of $1,020,000 (cost $816,000). Bonita grants the right to return systems that do not sell in three months following delivery. Past experience indicates that the normal return rate is 15%. By October 11, 2020, retailers returned systems to Bonita and were granted credits of $86,000. The company follows IFRS. Prepare Bonita's journal entries to record the $86,000 of actual returns on October 10, 2020. (Hint: Use Accounts Payable forthe amount returned.) (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If noentry is required, select "No Entry" for the account titles and enter 0 for the amounts.)DateAccount Titles and ExplanationDebitCreditOctober10,2020(To record returns from customers)October10,2020(To record return of inventory)October10,2020(To adjust refund liability for end of right of return)October10,2020(To adjust cost of goods sold for end of right of return)

Cost of returned inventory = = [($816000/$1020000) X $86000] = $68,800

Answered: On July 10, 2020, Bonita Ltd. sold GPS…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter4: The Adjustment Process

Section: Chapter Questions

Problem 11PB: Prepare journal entries to record the following transactions. Create a T-account for Unearned...

See similar textbooks

Related questions

Question

On July 10, 2020, Bonita Ltd. sold GPS systems to retailers on account for a selling price of $1,020,000 (cost $816,000). Bonita grants the right to return systems that do not sell in three months following delivery. Past experience indicates that the normal return rate is 15%. By October 11, 2020, retailers returned systems to Bonita and were granted credits of $86,000. The company follows IFRS.

Prepare Bonita's journal entries to record the $86,000 of actual returns on October 10, 2020. (Hint: Use Accounts Payable for
the amount returned.) (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 0 for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
October
10,
2020
(To record returns from customers)
October
10,
2020
(To record return of inventory)
October
10,
2020
(To adjust refund liability for end of right of return)
October
10,
2020
(To adjust cost of goods sold for end of right of return)

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions