Vaughn Appliance Co. manufactures low-price, nofrills appliances that are in gre
ID: 2509677 • Letter: V
Question
Vaughn Appliance Co. manufactures low-price, nofrills appliances that are in great demand for rental units. Pricing and cost information on Vaughn’s main products are as follows.
Customers can contract to purchase either individually at the stated prices or a three-item bundle with a price of $1,780. The bundle price includes delivery and installation. Vaughn also provides installation (not a separate performance obligation).
Respond to the requirements related to the following independent revenue arrangements for Vaughn Appliance Co.On June 1, 2017, Vaughn sold 90 washer/dryer units without installation to Laplante Rentals for $62,100. Laplante is a newer customer and is unsure how this product will work in its older rental units. Vaughn offers a 60-day return privilege and estimates, based on prior experience with sales on this product, 4% of the units will be returned. Prepare the journal entries for the sale and related cost of goods sold on June 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 0 for the amounts.)
Account Titles and Explanation
Debit
Credit
(To record sales)
(To record cost of goods sold)
YellowCard Property Managers operates upscale student apartment buildings. On May 1, 2017, Vaughn signs a contract with YellowCard for 280 appliance bundles to be delivered and installed in one of its new buildings. YellowCard pays 20% cash at contract signing and will pay the balance upon installation no later than August 1, 2017. Prepare journal entries for Vaughn on (1) May 1, 2017, and (2) August 1, 2017, when all appliances are installed. (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 0 for the amounts.)
No.
Date
Account Titles and Explanation
Debit
Credit
(1)
May 1, 2017
(2)
Aug. 1, 2017
(To record sales)
(To record cost of goods sold)
Date
Account Titles and Explanation
Debit
Credit
May 1, 2017
Jul. 1, 2017
(To record sales)
Date
Account Titles and Explanation
Debit
Credit
Feb. 1, 2017
Apr. 1, 2017
(To record sales)
(To record cost of goods sold)
Item StandaloneSelling Price (Cost) Refrigerator $500 ($260 ) Range 550 (280 ) Stackable washer/dryer unit 690 (410 )
Explanation / Answer
Answer:
Entries in Books of Vaughn Appliance:
Sitation-1
Date: June 1,2017
Account Titles and Explanation
Debit
Credit
Laplante Rentals A/c
$62100
Sales/Revenue A/c
$62100
(To record sales)
No Entry
0
No Entry
0
(To record cost of goods sold)
Sitation-2
Date: May 1, 2017 and Aug. 1, 2017
No.
Date
Account Titles and Explanation
Debit
Credit
(1)
May 1, 2017
Cash/Bank A/c
$99680
Advance from YellowCard A/c
$99680
(2)
Aug. 1, 2017
Advance from YellowCard A/c
$99680
YellowCard A/c
$398720
Sales/Revenue A/C
$498400
(To record sales)
No Entry
0
No Entry
0
(To record cost of goods sold)
Situation-3
Date
Account Titles and Explanation
Debit
Credit
May 1, 2017
Cash/Bank A/c
$99680
Advance from YellowCard A/c
$99680
Jul. 1, 2017
Advance from YellowCard A/c
$99680
YellowCard A/c
$448560
Sales/Revenue A/C
$548240
(To record sales)
Working note:
1.No. of Appliances-280@$1780=$498400
Bonus =$498400*10%=$49840
2.Assumption-
We assume that Advance given does not include Bonus portion as it is dependant on Installation of Units by July 1,2017
Situation-4
Date
Account Titles and Explanation
Debit
Credit
Feb. 1, 2017
Cash/Bank A/c
$69420
Advance from Epic Rentals A/c
$69420
Apr. 1, 2017
No Entry
0
No Entry
0
(To record sales)
No Entry
0
No Entry
0
(To record cost of goods sold)
Working Notes:
1.No of Bundles-390@$1780=$694200
Advance amount-$694200@10%=$69420
2.Assumption:
We assume that Units are ready to ship but as they are not shipped, we can not book sale.
Answer:
Entries in Books of Vaughn Appliance:
Sitation-1
Date: June 1,2017
Account Titles and Explanation
Debit
Credit
Laplante Rentals A/c
$62100
Sales/Revenue A/c
$62100
(To record sales)
No Entry
0
No Entry
0
(To record cost of goods sold)
Sitation-2
Date: May 1, 2017 and Aug. 1, 2017
No.
Date
Account Titles and Explanation
Debit
Credit
(1)
May 1, 2017
Cash/Bank A/c
$99680
Advance from YellowCard A/c
$99680
(2)
Aug. 1, 2017
Advance from YellowCard A/c
$99680
YellowCard A/c
$398720
Sales/Revenue A/C
$498400
(To record sales)
No Entry
0
No Entry
0
(To record cost of goods sold)
Situation-3
Date
Account Titles and Explanation
Debit
Credit
May 1, 2017
Cash/Bank A/c
$99680
Advance from YellowCard A/c
$99680
Jul. 1, 2017
Advance from YellowCard A/c
$99680
YellowCard A/c
$448560
Sales/Revenue A/C
$548240
(To record sales)
Working note:
1.No. of Appliances-280@$1780=$498400
Bonus =$498400*10%=$49840
2.Assumption-
We assume that Advance given does not include Bonus portion as it is dependant on Installation of Units by July 1,2017
Situation-4
Date
Account Titles and Explanation
Debit
Credit
Feb. 1, 2017
Cash/Bank A/c
$69420
Advance from Epic Rentals A/c
$69420
Apr. 1, 2017
No Entry
0
No Entry
0
(To record sales)
No Entry
0
No Entry
0
(To record cost of goods sold)
Working Notes:
1.No of Bundles-390@$1780=$694200
Advance amount-$694200@10%=$69420
2.Assumption:
We assume that Units are ready to ship but as they are not shipped, we can not book sale.
Account Titles and Explanation
Debit
Credit
Laplante Rentals A/c
$62100
Sales/Revenue A/c
$62100
(To record sales)
No Entry
0
No Entry
0
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