Question
In: Accounting
On August 31, 2016, the Silva Company sold merchandise to the Bendix Corporation for $650,000. Terms...
|
On August 31, 2016, the Silva Company sold merchandise to the Bendix Corporation for $650,000. Terms of the sale called for a down payment of $130,000 and four annual installments of $130,000 due on each August 31, beginning August 31, 2017. Each installment also will include interest on the unpaid balance applying an appropriate interest rate. The book value of the merchandise on Silva's books on the date of sale was $390,000. The perpetual inventory system is used. The company's fiscal year-end is December 31. |
| Required: |
|
1. |
Complete the table below by entering the amount of gross profit to be recognized in each of the five years of the installment sale applying each of the following methods: |
| a. Point of delivery revenue recognition. | |
| b. Installment sales method. | |
| c. Cost recovery method. | |
|
2. |
Prepare journal entries for each of the five years applying for the three revenue recognition methods. Ignore interest charges. |
|
3. |
Prepare a partial balance sheet as of the end of 2016 and 2017 listing the items related to the installment sale applying each of the above three methods. |
Solutions
ekkarill92 answered 6 months agoRelated Solutions
On August 1, 2016, Pereira Corporation has sold, on account, 1,600 Wiglows to Mendez Company at...
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In 2016, Pereira incurred warranty costs of $9,200. Costs for 2017
were $7,000.
Required:
1.
Prepare the journal entries for the preceding
transactions.
2.
Show how Pereira would report the items on the December 31,
2016, balance sheet.
CHART OF ACCOUNTS
Pereira Corporation
General Ledger
ASSETS
111...
The December 31, 2016, balance sheet of the Kramer Company had Accounts Receivable of $650,000 and...
The December 31, 2016, balance sheet of the Kramer Company had
Accounts Receivable of $650,000 and a credit balance in Allowance
for Doubtful Accounts of $33,000. During 2017, the following
transactions occurred: sales on account $1,550,000; sales returns
and allowances, $100,000; collections from customers, $1,250,000;
accounts written off, $35,000; previously written off accounts of
$8,000 were collected.
Journalize the 2017 transactions. (Credit account
titles are automatically indented when the amount is entered. Do
not indent manually.)
Account Titles and Explanation...
During the year ended December 31, 2019, Parent Company (the parent) sold merchandise to Subsidiary Corporation...
During the year ended December 31, 2019, Parent Company (the
parent) sold merchandise to Subsidiary Corporation (a 90%-owned
subsidiary) for a price of $32,340, at a markup of 32% of cost.
Subsidiary sold merchandise acquired from Parent to outsider
customers for $38,500 during 2019. Included in Subsidiary’s January
1, 2019, inventories were goods acquired from Parent at a billed
price of $3,036 and included in Subsidiary’s December 31, 2019,
inventories were goods acquired from Parent at a billed price of...
During the year ended December 31, 2019, Parent Company (the parent) sold merchandise to Subsidiary Corporation...
During the year ended December 31, 2019, Parent Company (the
parent) sold merchandise to Subsidiary Corporation (a 90%-owned
subsidiary) for a price of $32,340, at a markup of 32% of cost.
Subsidiary sold merchandise acquired from Parent to outsider
customers for $38,500 during 2019. Included in Subsidiary’s January
1, 2019, inventories were goods acquired from Parent at a billed
price of $3,036 and included in Subsidiary’s December 31, 2019,
inventories were goods acquired from Parent at a billed price of...
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Martin Co. sold merchandise to Fess Company on December 31, FOB
shipping point. If the merchandise is in transit on December 31,
the end of the fiscal year, which company would report it in its
financial statements? Explain.
How is the method of determining the cost of the inventory and
the method of valuing it disclosed in the financial statements?
What uses can be made of the estimate of the cost of inventory
determined by the gross profit method?
On December 31, 2016 Berry Corporation sold some of its product to Flynn Company, accepting a...
On December 31, 2016 Berry Corporation sold some of its product
to Flynn Company, accepting a 3%, four-year promissory note having
a maturity value of $900,000 (interest payable annually on December
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Company, however, pays 8% for its borrowed funds. The product sold
is carried on the books of Berry at a manufactured cost of
$560,000. Assume Berry uses a perpetual inventory system.
Prepare the journal entries to record the transaction...
On October 7, Monty Company sold merchandise to a customer for $1,200 with credit terms of...
On October 7, Monty Company sold merchandise to a customer for
$1,200 with credit terms of 2/10, n/30. The cost of the merchandise
is $800. On October 10, Monty granted the customer a $100 allowance
on the merchandise the customer purchased on October 7. In the
October 10 journal entry, Monty will:
Debit Merchandise Inventory $100; credit Cost of Goods Sold
$100
Debit Merchandise Inventory $100; credit Sales Returns and
Allowances $100
Debit Sales Returns and Allowance $100; credit Accounts...
On September 31, 2054, Vault-Tec Corporation sold merchandise to a customer for $70,000. The cost of...
On September 31, 2054, Vault-Tec Corporation sold merchandise to
a customer for $70,000. The cost of the merchandise was $25,000. In
payment, Vault-Tec Corporation agreed to accept a 10%, 9 month note
requiring the payment of interest and principal on June 30, 2055.
The 10% is appropriate in this situation. Vault-Tec Corporation
uses the perpetual inventory system and their year-end is December
31.
Instructions:
a) Prepare journal entries to record the sale of merchandise,
the December 31, 2054 interest accrual,...
On December 1, 2016, Lynch Incorporated sold $18,000 of merchandise with terms 2/10, n/EOM. On December...
On December 1, 2016, Lynch Incorporated sold $18,000 of merchandise
with terms 2/10, n/EOM. On December 11, 2016, collections were made
on sales originally billed for $12,000, and on December 31, 2016,
additional collections on sales originally billed for $5,000 were
received.
Required:
1. Prepare the journal entries to record the sale, collections, and
any required year-end adjustments assuming that Lynch records
accounts receivable and sales at (a) the gross price and (b) the
net price.
2. Next Level Assume...
On December 1, 2016, Lynch Incorporated sold $17,000 of merchandise with terms 2/10, n/EOM. On December...
On December 1, 2016, Lynch Incorporated sold $17,000 of
merchandise with terms 2/10, n/EOM. On December 11, 2016,
collections were made on sales originally billed for $10,000, and
on December 31, 2016, additional collections on sales originally
billed for $6,000 were received.
Required:
1.
Prepare the journal entries to record the sale, collections,
and any required year-end adjustments assuming that Lynch records
accounts receivable and sales at (a) the gross price and (b) the
net price.
2.
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