An entity sells car's spare parts to ZZZ Car Repair during 2020. The entity offers rebates of 3% on purchases up to $30,000 and 49% on purchases above $30,000 if the customer's purchases for the year exceed $120,000. In the past, ZZZ normally purchases more than $100,000 in parts during a calendar year. On March 15, 2020, Zzz Car Repair purchased $38,000 of parts. The journal entry to record the sale includes a a. debit to Accounts Receivable for $36,860. O b. credit to Sales Revenue for $36,480. O c.credit to Sales Revenue for $36,860. O d. debit to Accounts Receivable for $38,000.

An entity sells car's spare parts to ZZZ Car Repair during 2020. The entity offers rebates of 3% on purchases up to $30,000 and 49% on purchases above $30,000 if the customer's purchases for the year exceed $120,000. In the past, ZZZ normally purchases more than $100,000 in parts during a calendar year. On March 15, 2020, Zzz Car Repair purchased $38,000 of parts. The journal entry to record the sale includes a a. debit to Accounts Receivable for $36,860. O b. credit to Sales Revenue for $36,480. O c.credit to Sales Revenue for $36,860. O d. debit to Accounts Receivable for $38,000.

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 6MC

See similar textbooks

Similar questions

On January 1, 2019, Park Company accepted a 36,000, non-interest-bearing, 3-year note from a major customer in exchange for used equipment. The equipment had originally cost Park 200,000 and had a book value of 20,000 on the date of the sale. At the 12% imputed interest rate for this type of loan, the present value of the note is 25,500 on January 1, 2019. Park uses the effective interest rate. What is the carrying value of the note receivable on Parks December 31, 2019, balance sheet? a. 28,560 b. 29,000 c. 32,500 d. 36,000
Caramel Company sells parts to Cotton Co during 2023. Caramel offers rebates of 2% on purchases up to $60,000 and 3% on purchases above $60,000 if the customer's purchases for the year exceed $200,000. In the past Cotton co normally purchases $300,000 in parts during a calendar year.On March 25, 2023, Cotton Co purchased $74,000 of parts. The journal entry to record the purchase includes
Amber gears sells gears to HTC Car Repair during 2018.It offers rebates of 2% on purchases up to $60,000 and 3% on purchases above $60,000 if the customer's purchases for the year exceed $200,000. In the past, HTC normally purchases $300,000 in parts during a calendar year. On March 25, 2018, HTC Car Repair purchased $74,000 of parts. The journal entry to record the purchase includes:
Splish Company sells goods to Blossom Company during 2020. It offers Blossom the following rebates based on total sales to Blossom. If total sales to Blossom are 10,500 units, it will grant a rebate of 2%. If it sells up to 21,200 units, it will grant a rebate of 5%. If it sells up to 30,800 units, it will grant a rebate of 6%. In the first quarter of the year, Splish sells 10,600 units to Blossom at a sales price of $106,000. Splish, based on past experience, has sold over 37,600 units to Blossom, and these sales normally take place in the third quarter of the year.What amount of revenue should Splish report for the sale of the 10,600 units in the first quarter of the year. Revenue $
AAA Company sells gift certificates that expire one year after their issuance. Information on gift certificates is shown below: Unearned revenue – gift certificates, January 1, 2020 - 600,000Gift certificates sold during 2019 - 1,000,000Prior year gift certificates redeemed in 2020 - 400,000Gift certificates sold and redeemed in 2020 - 700,000 How much is the unearned revenue from gift certificates as of December 31, 2020?
Teal Company sells goods to Flint Company during 2020. It offers Flint the following rebates based on total sales to Flint. If total sales to Flint are 10,900 units, it will grant a rebate of 3%. If it sells up to 18,800 units, it will grant a rebate of 5%. If it sells up to 30,900 units, it will grant a rebate of 6%. In the first quarter of the year, Teal sells 11,800 units to Flint at a sales price of $129,800. Teal, based on past experience, has sold over 42,400 units to Flint, and these sales normally take place in the third quarter of the year.What amount of revenue should Teal report for the sale of the 11,800 units in the first quarter of the year. Revenue
Sanaz Corporation sells computers under a 3-year warranty contract that requires the corporation to replace defective parts and to provide the necessary repair labor. During 2020, the corporation sells for cash 700 computers at a unit price of $2,000. On the basis of past experience, the3-year warranty costs are estimated to be $130 for parts and $170 for labor per unit.(For simplicity, assume that all sales occurred on December 31, 2020.) The warranty is not sold separately from the computer. Required a. Record any necessary journal entries in 2020.b. What liability relative to these transactions would appear on the December 31, 2020, balance sheet and how would it be classified?c. In 2021, the actual warranty costs to Sanaz Corporation were $30,500 for parts and $45,100 for labor. Record any necessary journal entries in 2021
Sandhill Company sells goods to Blossom Company during 2025. It offers Blossom the following rebates based on total sales to Blossom. If total sales to Blossom are 9,300 units, it will grant a rebate of 2%. If it sells up to 20,600 units, it will grant a rebate of 4%. If it sells up to 28,000 units, it will grant a rebate of 6%. In the first quarter of the year, Sandhill sells 10,100 units to Blossom at a sales price of $90,900. Sandhill, based on past experience, has sold over 39,000 units to Blossom, and these sales normally take place in the third quarter of the year. What amount of revenue should Sandhill report for the sale of the 10,100 units in the first quarter of the year? Revenue $
Carla Vista Resellers Ltd. (CVRL) sells gently used and refurbished appliances. The company provides a three-month warranty that is included in the cost of the appliance. Claims under the warranties vary from replacing defective parts to providing customers with new appliances if repairs cannot be made. During 2024, the estimated cost related to the three-month warranties was $36,480, of which $24,000 had been incurred before year end ($18,240 on replacement appliances and $5,760 for parts). For an additional charge of $144, CVRL also offers extended warranty coverage for three years on its refurbished appliances. This amount is expected to cover the costs associated with the extended warranties. During 2024, CVRL sold 480 three-year warranty plans. The costs incurred during the year for repairs and replacements under these plans amounted to $14,400. Based on experience, the company estimates that its total warranty costs over the three-year coverage period will be $43,200, which it…
Carla Vista Company sells goods to Pearl Company during 2020. It offers Pearl the following rebates based on total sales to Pearl. If total sales to Pearl are 11,200 units, it will grant a rebate of 2%. If it sells up to 19,600 units, it will grant a rebate of 4%. It if sells up to 29,200 units, it will grant a rebate of 6%. In the first quarter of the year, Carla Vista sells 9,000 units to Pearl at a sales price of $90,000. Based on past experience, Carla Vista has sold over 40,000 units to Pearl, and these sales normally take place in the third quarter of the year.
FORD, INC., a dealer of household appliances, sells washing machines at an average price of P8,100. The company also offers to each customer a separate 3-year warranty contract for P810 that requires the company to provide periodic maintenance services and to replace defective parts. During 2019, FORD sold 300 washing machines and 270 warranty contracts for cash. The company estimates that the warranty costs are P180 for parts and P360 for labor. Assume sales occurred on December 31, 2019. FORDS’s policy is to recognize income from the warranties on a straight-line basis. In 2020, FORD incurred actual costs relative to 2019 warranty sales of P18,000 for parts and P36,000 for labor. What liability relative to the 2019 warranties would appear on the December 31, 2020, statement of financial position and how would it be classified? Current Noncurrent Group of answer choices P145,800 P 0 P72,900 P145,800 P72,900 P72,900 P145,800 P72,900
Lake Power Sports sells jet skis and other powered recreational equipment. Customers pay one-third of the sales price of a jet ski when they initially purchase the ski, and then pay another one-third each year for the next two years. Because Lake has little information about the ability to collect these receivables, it uses the installment sales method for revenue recognition. In 2020, Lake began operations and sold jet skis with a total price of $1,050,000 that cost Lake $525,000. Lake collected $350,000 in 2020, $350,000 in 2021, and $350,000 in 2022 associated with those sales. In 2021, Lake sold jet skis with a total price of $1,770,000 that cost Lake $1,062,000. Lake collected $590,000 in 2021, $525,000 in 2022, and $525,000 in 2023 associated with those sales. In 2023, Lake also repossessed $130,000 of jet skis that were sold in 2021. Those jet skis had a fair value of $48,750 at the time they were repossessed.Total cash collections on installment sales during 2021 would be:…