On March 10, 2020, Wildhorse Company sold to Barr Hardware 230 tool sets at a price of $53 each (cost $28 per set) with terms of n/60, f.o.b. shipping point. Wildhorse allows Barr to return any unused tool sets within 60 days of purchase. Wildhorse estimates that (1) 10 sets will be returned, (2) the cost of recovering the products will be immaterial, and (3) the returned tools sets can be resold at a profit. On March 25, 2020, Barr returned 6 tool sets and received a credit to its account. (a) Prepare journal entries for Wildhorse to record (1) the sale on March 10, 2020, (2) the return on March 25, 2020, and (3) any adjusting entries required on March 31, 2020 (when Wildhorse prepares financial statements). Wildhorse believes the original estimate of returns is correct. (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.) No. Account Titles and Explanation Debit Credit (1) (To record sales) (To record cost of goods sold) (2) (To record sales returns) (To record cost of goods returned) (3) (Adjusting entry for sales returns) (Adjusting entry for cost of goods sold) (b) Indicate the income statement and balance sheet reporting by Wildhorse at March 31, 2020, of the information related to the Barr sales transaction. Income Statement (partial) $ : $ Balance Sheet (partial) $ : $ $

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 15E: On January 1, 2019, Piper Company entered into an agreement with Save-Mart to sell its most popular...

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(a)

Prepare journal entries for Wildhorse to record (1) the sale on March 10, 2020, (2) the return on March 25, 2020, and (3) any adjusting entries required on March 31, 2020 (when Wildhorse prepares financial statements). Wildhorse believes the original estimate of returns is correct. (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.)

No.

Account Titles and Explanation

Debit

Credit

(1)

(To record sales)

(To record cost of goods sold)

(2)

(To record sales returns)

(To record cost of goods returned)

(3)

(Adjusting entry for sales returns)

(Adjusting entry for cost of goods sold)

(b)

Indicate the income statement and balance sheet reporting by Wildhorse at March 31, 2020, of the information related to the Barr sales transaction.

Income Statement (partial)


		$

:

Balance Sheet (partial)


		$

:				$
				$

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