Chapter 8, Problem 39P

Sell4U is an online site that allows its clients to post items for sale. Sell4U charges a 5% brokerage fee for use of the site, payable within 10 days of the sale. As an agent, Sell4U may recognize revenue for the brokerage fee as soon as an item is sold.   True or False

Maple Woodworking accepts creditcards at its store. Maple’s credit card processor charges a fee of 2% of the total amount of anycredit sale. Assume that Ralph Stone purchases $9,000 of custom furniture and pays with aVISA card. Make the entry that Maple would make to record the sale to Stone. (You do notneed to make the cost of goods sold entry in this exercise.)

Suppose Casey Title Company normally charges $500 for services related to selling a house. As part of a summer special, Casey offers customers a trade discount of 15%. On July 9, Linda Holmes uses the services of Casey and pays cash equal to the discounted price.   Record the revenue recognized by Casey on July 9. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Secure Home provides house-sitting for people while they are away on vacation. Some of its customers pay immediately after the job is finished. Some customers ask that the business send them a bill. As of the end of the year, Secure Home has collected $1,720 from cash-paying customers. Secure Home’s remaining customers owe the business $3,080. Secure Home recorded $1,720 of service revenue for the year. (Cash basis) If Secure Home had recorded their service revenue using the other method, how much service revenue would they have recorded for the year?

Lamplight Plus sells lamps to consumers. The company contracts with a supplier who provides them with lamp fixtures. There is an agreement that Lamplight Plus is not required to provide cash payment immediately and instead will provide payment within thirty days of the invoice date. Additional information: Lamplight purchases thirty light fixtures for $20 each on August 1, invoice date August 1, with no discount terms Lamplight returns ten light fixtures (receiving a credit amount for the total purchase price per fixture of $20 each) on August 3. Lamplight purchases an additional fifteen light fixtures for $15 each on August 19, invoice date August 19, with no discount terms. Lamplight pays $100 toward its account on August 22. What amount does Lamplight Plus still owe to the supplier on August 30? What account is used to recognize this outstanding amount?

Consider each of the following scenarios: a. A seller orally agrees with one of its best customers to deliver goods in exchange for 10,000. While the sellers practice is to obtain a written sales agreement, the seller delivered these goods to the customer without a written agreement due to the customers urgent need. b. A seller agrees to provide accounting services to a customer for the next year in exchange for 40,000. While the two parties are negotiating the terms of the agreement and the specific services to be performed, the seller begins to perform some services as a gesture of good faith. c. A seller has a written agreement to deliver goods to a customer for 50 per unit. The price will drop to 45 per unit if the customer purchases more than 2,000 units per month. d. A seller had a written agreement and provided custodial services to a customer for 2,000 per month in a previous year. The contract expired on December 31, 2019. During negotiations for a new contract in January 2020, custodial services were provided at the previous monthly rate and paid for by the buyer. The seller and the customer agree to a new contract on February 1, 2020. The seller is concerned whether a contract existed in January 2020 and whether revenue can be recognized. Required: 1. Determine if a contract exists for each of the scenarios. 2. If it is determined that a contract exists but the seller believes it is probable that it will not collect the expected consideration, how does this affect the sellers ability to recognize revenue?

Sunrise Flowers sells flowers to a customer on credit for $130 on October 18, with a cost of sale to Sunrise of $50. What entry to recognize this sale is required if Sunrise Flowers uses a periodic inventory system?

GameDay sells recreational vehicles along with secure parking storage to customers. Game Day sells the FB7 model for 62,000, and this price includes one year of secure parking storage. GameDay also sell secure parking storage separately for 8,000 per year, and customers can purchase the FB7 model without secure parking storage for 60,000. If a customer purchases the FB7 model with secure parking storage, how should GameDay allocate the transaction price?