In: Accounting
Nasi Ambeng Bagelen (NAB) in Putrajaya is a well-known restaurant that serves rice and delicacies from the original Javanese cuisine. Its well-known delicious menu makes it very popular. Due to its increasing popularity, the owner of NAB provides 100 packs of RM8 per pack of Nasi Ambeng every day to Newsagent KL Sentral in an effort to reach wider customers. On 30 th April 2020, Newsagent KL Sentral reported to NAB that two thirds of the total pack for a month’s sale had been sold. The transportation cost to deliver packed nasi ambeng from Putrajaya to Newsagent KL Sentral is RM80 daily. Newsagent KL Sentral is to remit cash to NAB after deducting a 6% commission, the costs of advertising of RM350 and RM400 to dispose the unsold nasi ambeng to every day to a food disposal centre which will be recycling the food in an environmentally friendly way.
Required:
i) Discuss the performance obligations of NAB as indicated in the above and the point in which the performance obligations are satisfied and the revenue is recognized.
ii) Compute the amount of cash to be remitted by Newsagent KL Sentral.
iii) Prepare the journal entries in the books of NAB and Newsagent KL Sentral to record the remittance of cash on 30th April 2020.
(i) Performance obligation of NAB is delivery of product, Performance obliation is said to be satisfied when same is sent to KL Sentral, as per trend no return is observed and only commisson charges charged by the KL Sentral. And in case of goods remain unsold same is not treated as Revenue from operatios but charged as other income. |
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(ii) Amount transferred after deducting commission is 503.84 RM - Working Note |
(iii) | In the books of NAB on 30th April 2020 | ||
Account Descriptions | Debit ( in RM) | Credit ( in RM) | |
KL Sentral Debtor A/c | 503.84 | ||
Commission Expenses A/c | 32.16 | ||
To Sale | 536 | ||
( Being Sale made and Commission against sale booked) | |||
In the books of KL Sentral on 30th April 2020 | |||
Account Descriptions | Debit ( in RM) | Credit ( in RM) | |
Cash A/c Dr. | 32.16 | ||
To Commission Earings | 32.16 | ||
( Being Commission earned) |
NAB | ||||||
100 Pack | 8 RM per Pack | On Daily Basis | ||||
2 / 3 , notify by KL Sentral , of total Pack had been sold= 100 X 2/3 = 66.66 pcks approx 67 Packs. | ||||||
Transaporataion cost for 2/3 pack is 80 RM daily | ||||||
Remittance of Cash by the KL Sentral by deducting 6% commisiion | ||||||
Cost of Advertising = 350 RM | ||||||
Disposal cost of Unsold product = 400 RM | ||||||
8 RM X 67 = 536 RM | ||||||
Deduction of Commisiion by KL 6% on Sale = 536 RM X 6% = 32.16 RM ( Working Note ) | ||||||
Cash To be remitted is 536 RM - 32.16 RM = 503.84 RM |