Exercise 18-20 Marigold Company is presently testing a number of new agricultura
ID: 2561806 • Letter: E
Question
Exercise 18-20
Marigold 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. Marigold estimates returns of 20%. Marigold sells these seeds on account for $1,520,000 (cost $760,000) 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)
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Exercise 18-20
Marigold 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. Marigold estimates returns of 20%. Marigold sells these seeds on account for $1,520,000 (cost $760,000) on January 2, 2017. Customers are required to pay the full amount due by March 15, 2017.
Explanation / Answer
Solution.
Date Account Titles and Explanation Debit Credit Jan. 2, 2017 Account Receivable 152,000 Sales Revenue 152,000 (To recognize revenue.) Cost of goods sold 760,000 Inventory 760,000 (To record cost of goods sold.) Date Account Titles and Explanation Debit Credit 1-Mar-17 Sales Return 92,000 Account receivable 92,000 (To record sales returns) Inventory 46,000 Cost of goods sold 46,000 (To record cost of goods returned) 15-Mar-17 Cash 1,428,000 Account receivable 1,428,000 (To record cash received from coustomer)Related Questions
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