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- On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to McLaughlin Company for cash. McLaughlin Company charges a 750 service fee, advances 85% of Jordans accounts receivable, and charges an annual interest rate of 9% on any outstanding loan balance. Prepare the related journal entries for Jordan. Refer to RE6-10. On December 31, Jordan Inc. received 50,000 on assigned accounts. Prepare Jordans journal entries to record the cash receipt and the payment to McLaughlin.Serene Company purchases fountains for its inventory from Kirkland Inc. The following transactions take place during the current year. A. On July 3, the company purchases thirty fountains for $1,200 per fountain, on credit. Terms of the purchase are 2/10, n/30, invoice dated July 3. B. On August 3, Serene does not pay the amount due and renegotiates with Kirkland. Kirkland agrees to convert the debt owed into a short-term note, with an 8% annual interest rate, payable in two months from August 3. C. On October 3, Serene Company pays its account in full. Record the journal entries to recognize the initial purchase, the conversion, and the payment.On June 1, Phillips Corporation sold, with recourse, a note receivable from a customer to a bank. The note has a face value of 15,000 and a maturity value (principal plus interest) of 15,400. The discount is calculated to be 385, and the accrued interest income is 100. The recourse liability is estimated to be 1,000. Prepare the journal entry of Phillips to record the sale of the note receivable.
- Record the journal entry for each of the following transactions. Glow Industries purchases 750 strobe lights at $23 per light from a manufacturer on April 20. The terms of purchase are 10/15, n/40, invoice dated April 20. On April 22, Glow discovers 100 of the lights are the wrong model and is granted an allowance of $8 per light for the error. On April 30, Glow pays for the lights, less the allowance.Window World extended credit to customer Nile Jenkins in the amount of $130,900 for his purchase of window treatments on April 2. Terms of the sale are 2/60, n/150. The cost of the purchase to Window World is $56,200. On September 4, Window World determined that Nile Jenkinss account was uncollectible and wrote off the debt. On December 3, Mr. Jenkins unexpectedly paid in full on his account. Record each Window World transaction with Nile Jenkins. In order to demonstrate the write-off and then subsequent collection of an account receivable, assume in this example that Window World rarely extends credit directly, so this transaction is permitted to use the direct write-off method. Remember, however, that in most cases the direct write-off method is not allowed.On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to McLaughlin Company for cash. McLaughlin Company charges a 750 service fee, advances 85% of Jordans accounts receivable, and charges an annual interest rate of 9% on any outstanding loan balance. Prepare the related journal entries for Jordan.
- Spath Company borrows 75,000 by issuing a 4-year, noninterest-bearing note to a customer on January 1, 2019. In addition, Spath agrees to sell inventory to the customer at reduced prices over a 5-year period. Spaths incremental borrowing rate is 12%. The customer agrees to purchase an equal amount of inventory each year over the 5-year period so that a straight-line method of revenue recognition is appropriate. Required: Prepare the journal entries on Spaths books for 2019 and 2020. (Round answers to 2 decimal places.)Siomai Corp. sells gift certificates redeemable only when merchandise is purchased. The certificates have an expiration date two years after issuance. Upon redemption or expiration, Siomai recognizes the unearned revenue as realized. Data for the year are as follows: Unearned revenue, January 1, 2021- P3,000,000 Gift certificates sold- P10,000,000 Gift certificates redeemed- P8,200,000 Expired gift certificates- P600,000 Cost of goods sold- 60% On December 31, 2021, Siomai should report unearned revenues of:Garet Department Store sells gift certificates redeemable for store merchandise. The certificates expire one year after their issuance. Garet has the following information pertaining to its gift certificates sales and redemptions: Unearned at December 31, 2005 600,000 2006 sales 2,000,000 2006 redemptions of prior-year sales 200,000 2006 redemptions of current-year sales 1,400,000 Garet’s experience indicates that 10% of gift certificates sold will not be redeemed. Garet uses PFRS 15. In its December 31, 2006 statement of profit or loss, what amount should Garet report as total revenue relating to gift certificates? a. 2,155,560 b. 1,800,000 c. 2,200,000 d. 1,400,000
- SM Department Store sells gift certificates, redeemable for store merchandise that expires one year after their issuance. SM has the following information pertaining to its gift certificate sales and redemptions: Unearned Gift Certificates, beginning - P600,000 Gift Certificates sold during the current year - P2,000,000 Prior year gift certificates redeemed in the current year - P200,000 Gift certificates sold and redeemed in the current year - P1,400,000 SM’s pattern indicates that 90% of gift checks sold will be redeemed. On December 31, 2022, how much should be reported by SM as Unearned Gift Certificates?Mimay Store sells gift certificates redeemable for store merchandise. The certificates expire one year after their issuance. Mimay has the following information pertaining to its gift certificates sales and redemptions: Unearned on December 31, 2005 600,000 2006 sales 2,000,000 2006 redemptions of prior-year sales 200,000 2006 redemptions of current-year sales 1,400,000 Mimay's experience indicates that 10% of gift certificates sold will not be redeemed. Mimay uses PFRS 15. In its December 31, 2006 statement of profit or loss, what amount should Mimay report as total revenue relating to gift certificates?Shoemart Company issues gift certificates in denominations of P50, P100, P500 and P1,000. These certificates are redeemable in merchandise having an average gross profit of 30% of selling price. During the current year, the entity sold P500,000 worth of gift certificates and redeemed certificates having a sales value of P400,000. It is estimated that 8% of the certificates issued will not be redeemed by reason of expiration. 1. The balance of the gift certificates payable account as of year-end is:
