NEED Calculation and explanation Requirements: Review ASC 606-10-55-22 through 2
ID: 2530367 • Letter: N
Question
NEED Calculation and explanation
Requirements: Review ASC 606-10-55-22 through 28. Prepare an explanation for revenue recognition. Record initial accounting entries for KA for the month of January based on the new guidance on revenue recognition in ASC 606. Include references to the guidance to support your proposed accounting. Show any calculations you make to support your journal entries. Kitchen Aid PartIII: Note that Part II should be completed before Part III Background On January 15, JK sold a mixer it purchased from KA for $80 cash and delivered it to a customer. As part of this purchase, JK issued a coupon to the customer for 8% off the $25 selling price for KA's new titanium replacement mixer blades. It is valid for 90 days. JK has not previously sold replacement mixer blades. JK's management has considered the likelihood of use and the value of the coupon and estimated a standalone selling price for these coupons at S1. Requirements Prepare an explanation for revenue recognition. Record all accounting entries for this transaction for JK for January 15 based on the new guidance on revenue recognition in ASC 606. Include references to the guidance to support your proposed accounting. Show any calculations you make to support your journal entries.Explanation / Answer
Requirements of the new standard
606-10-55-22
An entity applies the accounting guidance for a sale with a right of return when a customer has a right to:
? a full or partial refund of any consideration paid;
? a credit that can be applied against amounts owed, or that will be owed, to the entity; or
? another product in exchange (unless it is another product of the same type, quality, condition, and price – i.e., an exchange).
DR. Cash $80
CR. Revenue $80
DR. Discount-Contra Revenue $2 (25*8%)
CR. Refund Liability $75
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.