Furtastic manufactures imitation fur garments. On June 1, 2018, Furtastic made a sale to Willett’s DepartmentStore under terms that require Willett to pay $150,000 to Furtastic on June 30, 2018. In a separate transaction onJune 15, 2018, Furtastic purchased brand advertising services from Willett for $12,000. The fair value of thoseadvertising services is $5,000. Furtastic expects that 3% of all sales will prove uncollectible.Required:1. Prepare the journal entry to record Furtastic’s sale on June 1, 2018.2. Prepare the journal entry to record Furtastic’s purchase of advertising services from Willett on June 15, 2018.Assume all of the advertising services are delivered on June 15, 2018.3. Prepare the journal entry to record Furtastic’s receipt of $150,000 from Willett on June 30, 2018.4. How would Furtastic’s expectation regarding uncollectible accounts affect its recognition of revenue from thesale to Willett’s Department Store on June 1, 2018? Explain briefly
Furtastic manufactures imitation fur garments. On June 1, 2018, Furtastic made a sale to Willett’s Department
Store under terms that require Willett to pay $150,000 to Furtastic on June 30, 2018. In a separate transaction on
June 15, 2018, Furtastic purchased brand advertising services from Willett for $12,000. The fair value of those
advertising services is $5,000. Furtastic expects that 3% of all sales will prove uncollectible.
Required:
1. Prepare the
2. Prepare the journal entry to record Furtastic’s purchase of advertising services from Willett on June 15, 2018.
Assume all of the advertising services are delivered on June 15, 2018.
3. Prepare the journal entry to record Furtastic’s receipt of $150,000 from Willett on June 30, 2018.
4. How would Furtastic’s expectation regarding uncollectible accounts affect its recognition of revenue from the
sale to Willett’s Department Store on June 1, 2018? Explain briefly
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