Question

In: Accounting

Lee Ltd delivers the goods to customers and gives the customers the right to return the...

Lee Ltd delivers the goods to customers and gives the customers the right to return the product with no reason within 14 days after delivery. 1st May 20X9, goods were sold and delivered to a customer. The price charged was equal to the cost of $200 plus a 20% profit margin. According to the historical data, a significant amount of goods were returned within 14 days after delivery. Please ignore the GST. Required: (Please label your responses as 1), 2).) 1) Entries on 1st May 20X9 (2/4) 2) Entries on 14th May 20X9 if goods were not returned within 14 days after delivery (2/4)

Solutions

Expert Solution

According to historical data a significant amount of good were returned within 14 days after delivery, the amount of sales return is large enough .

Management should pay attention to know the reason of sales return and make all possible efforts to reduce it.

Most of the common reason of sales return is

  • Product didn't meet customer's expectation
  • Customer found better product price elsewhere.
  • Bad quality of product.

Company can reduce sales return by providing after sale service and encourage customer review, more customer reviews drive higher sales and lower sales return.

(1)

Cost of goods sold = $200

Profit = 20% of $200 = $ 40

Sales value = $200+$40 = $240

Goods were sold on 14th May 2019

JOURNAL ENTRY

Date. Particular Amount(dr) Amount (cr)

2019

01May. A/c receivable. $240.

To sales. $240

(2)

In this case goods were not returned within 14 days after delivery

As on 14th May 2019 there are no any transaction, goods were sold on 1st May 2019

So there will be no any entry on the date of 14th May 2019.


Related Solutions

A certain store gives its customers a discount on the goods they buy based on a...
A certain store gives its customers a discount on the goods they buy based on a peculiar manner. The discount percentage is equal to each customer's remainder of weight to age, weight % age. The maximum discount percentage allowed is 10. If the remainder is greater than 10, the discount percentage is recomputed as the remainder of 10. For example, a customer whose weight is 175 lbs and age 61, buys an item costing $60.97. The discount percentage = 175...
flower garden sells natural supplements to customers with an unconditional right of return if they are...
flower garden sells natural supplements to customers with an unconditional right of return if they are not satisfied. The right of return extends 60 days. On February 10, 2021, a customer purchases $6,000 of products (cost $3,000) on account. Based on its prior experience, flower garden estimates returns will be 15%. On April 5, 2021, the customer returns $400 of merchandise. Prepare the necessary journal entries to record the transactions on February 10, 2021, and April 5, 2021.
After making a sale, a seller may have customers that return goods. The seller uses the...
After making a sale, a seller may have customers that return goods. The seller uses the perpetual inventory system. This requires the seller to _____. A.) reduce sales and cost of goods sold for the period B.) use historical data to record sales revenue in the amount that is expected to be received C.) record two adjusting entries to account for the estimated returns D.) All of the statements are correct.
Sweater Co offers its customers the right to return any products purchased up to 30 days...
Sweater Co offers its customers the right to return any products purchased up to 30 days after the sale, for any reason. Last Tuesday, Sweater Co sold 100 red sweaters to different customers. Based on historical experience, Sweater Co expects 15 of those sweaters to be returned for a full refund. Each sweater sells for $80 and costs the company $35 to produce. What entries should be made?
What are the buyer's duties when the seller delivers the contract goods?
What are the buyer's duties when the seller delivers the contract goods?
1.   A ___ gives the bondholder the right, but not the obligation, to sell/exchange the ___...
1.   A ___ gives the bondholder the right, but not the obligation, to sell/exchange the ___ for a pre-specified number of shares of the issuing firm's stock.         Call option; bond Callable bond; bond         Convertible bond; bond         Convertible bond; stock 2.   ___ is the amount by which the call price exceeds the ___ of a callable bond.         Call premium; face value         Conversion price; current stock price         Call premium; conversion...
The objectives of Sargon Products’ purchasing process are to obtain the right goods, at the right...
The objectives of Sargon Products’ purchasing process are to obtain the right goods, at the right price, at the right time. What are the significant risks to achievement of these objectives?
EDS is a national distributor of office supplies that delivers goods to department and specialty stores....
EDS is a national distributor of office supplies that delivers goods to department and specialty stores. They are planning to build a large distribution center in California and is analyzing different location sites. Your team has been assigned the task of selecting a major city in your state that should be the site of the new distribution center. Below are some considerations: a. At present, EDS has no distribution center in your state b. The goal is to locate a...
The table to the right gives size and distance data for the planets at a certain...
The table to the right gives size and distance data for the planets at a certain point in time. Calculate the scaled size and distance for each planet using a 1 to 10 billion scale model solar system. Planet Diameter Distance from Sun Mercury 4880 km 50.4 million km Venus 12,100 km 108.9 million km Earth 12,760 km 148.4 million km Mars 6790 km 220.2 million km Jupiter 143,000 km 748.6 million km Saturn 120,000 km 1501 million km Uranus...
The call provision included with a bond gives A. The bondholder the right to sell the...
The call provision included with a bond gives A. The bondholder the right to sell the bond back to the issuer at par value on designated dates B. None of the above C. The issuer the right to retire the bond, fully or partially, before the scheduled maturity date D. The bondholder the right to exchange the bond for a specified number of common shares
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT