Best Buy sold 20 refrigerators at $2,100 each. The cost of the refrigerators to Best Buy...

Best Buy sold 20 refrigerators at $2,100 each. The cost of the refrigerators to Best Buy was $900. The terms of the sale include a right to return for full refund within 30 days of purchase. Best Buy expects that 2 of the refrigerators will be returned. Best Buy follows IFRS 15.

Required:

Record the journal entries related to the above transactions. Assume 1 refrigerator was returned within the 30 days.

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Expert Solution

Particulars	Debit	Credit
Cash (2100 *20)	42,000
Sales Revenue (2100 *18)		37,800
Refund Liabilty (2100*2)		4,200
( Record Sale revenue and create a liabilty for right to return)

Cost of Goods Sold (900*18)	16,200
Estimated Returns Inventory (900*2)	1,800
Inventory (900*20)		18,000
( Record cost of goods sold and Estimated returns )

Refund Liabilty (2100*1)	2,100
Cash		2,100
( To record actual return for a refrigerator)

Inventory (900*1)	900
Estimated Returns Inventory		900
( To record for return of refrigerator in inventory)

ekkarill92 answered 1 year ago

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