Exercise 18-20 Marigold Company is presently testing a number of new agricultura
ID: 2538566 • Letter: E
Question
Exercise 18-20 Marigold Company is presently testing a number of new agricultural seeds that it has recendly harvested. To stimulate interest, it hes decided to grant to five of its largest customers the uncondional right of return to these preducts if not fully setisfied. The right of return extends for 4 months. Marigold estimates returns of 15%. Marigold sells these seeds on a count for $1,630,000 cost $733,500 on January 2, 2017. Customers ere equired to pey the full amount due by March 15, 2017 ) on Jenuary 2, 2017. Cuse or its laet s Prepare the journal entry o Maricld at January 2, 2017. (Credit sccount tit'es are automatically indented when amount is entered. Do not indent manuely. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts) Date Account Titles and Explanation Credit Jan, 2, 2017 To reogrize revenue) To recond cost of goods sold. Assume that one custormer returnis the seeds on March 1, 2017, due to unsatsfactory performance. Prepere the journal entry to record this trensaction, assuming this customer purchased $109,000 of seeds from Merigold and elso record the entry required to pay the full amount due by March 15, 2017. (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.) Date Account Titles and Explanation Debit Credit To record al retuns) (To record cost of goods returned)Explanation / Answer
Date Accounts Title Dr Cr Jan 2 2017 Accounts Receivable $1,630,000 Refund Liability (1630000*15%) 244500 Sales Revenue $1,385,500 Estimated Inventory Returns (733500*15%) 110025 Cost of Good sold 623475 Inventory 733500 Mar 1 2017 Refund Liability 108000 Accounts receivable 108000 Inventory (108000*45%) 48600 Estimated Inventory return 48600 Cost of good sold % 45.00 % 733500/1630000*100 31-Mar Refund Liability (244500-48600-136500) 59400 Accounts receivable 59400 Inventory (59400*45%) 26730 Estimated Inventory return 26730
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.