WileyPLUS: MyWilleyPLUSI Help I Contact Us 1 Lo9 Ou Intermediate Accounting (ACC

Question

WileyPLUS: MyWilleyPLUSI Help I Contact Us 1 Lo9 Ou Intermediate Accounting (ACCT 3103 and 3113) te Accounting, 16e BACK NEXT Problem 18-5 Martinez Ranch & Sandhill is a distributor of ranch and farm equipment. Its products range from small tools, power equipment for trench-digging and fencing, grain dryers, and barn winches. Most products are sold direct via its company catalog and Internet site. However, given some of its specialty products, select farm implement stores carry Martinez's products. Pricing and cost information on three of Martinez's most popular products are as follows. Standalone Selling Price (Cost) Item Mini-trencher Power fence hole auger Grain/hay dryer $ 3,800 ($2,100) (800) 14,200 (11,800) 1,100 Respond to the requirements related to the following independent revenue arrangements for Martinez Ranch& Sandhill. | I On January 1, 2017, Martinez sells 50 augers to Mills Farm & Fleet for $55.000. Mais signs a 6-month note at an annual interest rate of 12%. Martinez allows Mas to return any auger that it cannot use within 40 days and receve a full refund. Based on prior experience, Martinez estimates that S% of unts sold to customers ike Mills will be returned (using the most likely outcome approach). Martinez's costs to recover the products will be immaterial, and the returned augers are expected to be resold at a profit. Prepare the journal entry for Martinez on January 1, 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Accounts Receivable Debit Credit 55000 Sales Revenue (To record soles) Cost of Goods Sold 55000 40000 Inventory 40000 (To record cost of goods sold) LINK TO TEXT LINK TO TEXT LINK TO THAT

Explanation / Answer

Accounts Receivable A/c .................Dr $ 57000

To Sales Revenue $57000

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Entries at Martinez:

Apr 25, 2017 Consignment Inventory A/c .........Dr $88000

To Inventory A/c $88000

Jun. 30, 2017 Cash A/c .....................................Dr $39600

Commission A/c ..........................Dr   $4400

To Revenue A/c $44000

Jun. 30, 2017 Cost of Goods Sold A/c ..............Dr $32000

To Consignment Inventory A/c $32000

Entries at Sandhill Depot:

Jun. 30, 2017 Cash A/c......................................Dr $44000

To Martinez Ranch & Sandhill A/c. $44000

Jun. 30, 2017 Martinez Ranch & Sandhill A/c. Dr $44000

To Commission Revenue A/c $4400

To Cash A/c $39600

Note: You can use Consigner A/c instead of Martinez Ranch & Sandhill A/c

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