Exercise 18-20 Pina Company is presently testing a number of new agricultural se
ID: 2342253 • Letter: E
Question
Exercise 18-20
Pina Company is presently testing a number of new agricultural seeds that it has recently harvested. To stimulate interest, it has decided to grant to five of its largest customers the unconditional right of return to these products if not fully satisfied. The right of return extends for 4 months. Pina estimates returns of 15%. Pina sells these seeds on account for $1,570,000 (cost $785,000) on January 2, 2017. Customers are required to pay the full amount due by March 15, 2017.
Date
Account Titles and Explanation
Debit
Credit
(To recognize revenue.)
(To record cost of goods sold.)
Date
Account Titles and Explanation
Debit
Credit
(To record sales returns)
(To record cost of goods returned)
Date
Account Titles and Explanation
Debit
Credit
Mar. 31, 2017
(To record sales returns)
(To record cost of goods returned)
Open Show Work
Exercise 18-20
Pina Company is presently testing a number of new agricultural seeds that it has recently harvested. To stimulate interest, it has decided to grant to five of its largest customers the unconditional right of return to these products if not fully satisfied. The right of return extends for 4 months. Pina estimates returns of 15%. Pina sells these seeds on account for $1,570,000 (cost $785,000) on January 2, 2017. Customers are required to pay the full amount due by March 15, 2017.
Explanation / Answer
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Date Account Titles Debit Credit 02-Jan-17 Dr. Account Receivables $ 15,70,000.00 Cr. Sales $ 15,70,000.00 02-Jan-17 Dr. Cost of goods sold $ 7,85,000.00 Cr. Inventory $ 7,85,000.00 March 31,2017 Dr. Sales Return $ 1,02,000.00 Cr. Account Receivables $ 1,02,000.00 March 31,2017 Dr. Inventory $ 51,000.00 Cost of goods sold $ 51,000.00 March 15, 2017 Cash $ 14,68,000.00 Accounts Receivable $ 14,68,000.00 March 31,2017 Sales returns and allowances $ 1,33,500.00 Allowances for sales returns and allowances $ 1,33,500.00 March 31,2017 Dr. Inventory $ 66,750.00 Cost of goods sold $ 66,750.00Related Questions
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