Riverbed Company is presently
Riverbed Company is presently testing a number of newagricultural seed planters that it has recently developed. Tostimulate interest, it has decided to grant to five of its largestcustomers the unconditional right of return to these products ifnot fully satisfied. The right of return extends for 4 months.Riverbed estimates returns of 15%. Riverbed sells these planters onaccount for $1,550,000 (cost $697,500) on January 2, 2020.Customers are required to pay the full amount due by March 15,2020.
(a)
Prepare the journal entry for Riverbed at January 2, 2020.(Credit account titles are automatically indented whenamount is entered. Do not indent manually. If no entry is required,select “No entry” for the account titles and enter 0 for theamounts.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
| Jan. 2, 2020 | |||
|
(To recognize revenue.) |
|||
|
(To record cost of goods sold.) |
(b)
Assume that one customer returns planters on March 1, 2020, dueto unsatisfactory performance. Prepare the journal entry to recordthis transaction, assuming this customer purchased $97,000 ofplanters from Riverbed and also record the entry required to paythe full amount due by March 15, 2020. (Credit accounttitles are automatically indented when amount is entered. Do notindent manually. If no entry is required, select “No entry” for theaccount titles and enter 0 for the amounts.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|
Jan. 2,2020Mar. 1, 2020Mar. 15, 2020Mar. 31, 2020 |
|||
|
(To record sales returns) |
|||
|
(To record cost of goods returned) |
|||
|
Jan. 2,2020Mar. 1, 2020Mar. 15, 2020Mar. 31, 2020 |
|||
(c)
Assume Riverbed prepares financial statements quarterly. Preparethe necessary entries (if any) to adjust Riverbed’s financialresults for the above transactions on March 31, 2020, assumingremaining expected returns of $135,500. (Credit accounttitles are automatically indented when amount is entered. Do notindent manually. If no entry is required, select “No entry” for theaccount titles and enter 0 for the amounts.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|
Mar. 31, 2020 |
|||
|
(To record sales returns) |
|||
|
(To record cost of goods returned) |
Answer:
The Journal entries are shown below with the help of aspreadsheet:-
(a)
(b)
(c)
"Our Prices Start at $11.99. As Our First Client, Use Coupon Code GET15 to claim 15% Discount This Month!!"
