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Ch 6 In_Class_Exercise with Solutions - Part Two.docx -...

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Question 9On May 2, 2018, Venden Company sold 100 products for $100 each to Amaya Inc. for cash.Venden allows Amaya to return any unused product within 30 days and receive a full refund. Thecost of each product is $60. To determine the transaction price, Venden decides that the approachthat is most predictive of the amount of consideration to which it will be entitled is the mostlikely amount. Using the most likely amount, Venden estimated that:1.Three products will bereturned.2.The costs of recovering the products will be immaterial.3.The returned products areexpected to be resold at a profit.On May 20, 2018, two products were returned and restored.Question:How should Venden record this sale?
Question 10Morgan Inc., an equipment dealer, sells equipment on January 1, 2017, to Lane Company for$100,000. It agrees to repurchase this equipment from Lane Company on December 31, 2018,for a price of $121,000. Please make journal entries for this transaction.
Dec 31, 2018Interest Expense ($110,000 x 10%) $11,000Contract Liability$11,000Contract Liability ($100,000+$10,000+$11,000)$121,000Cash$121,000Question 11Butler Company sells $450,000 (cost $280,000) of fireplaces on March 1, 2017, to a local coffeeshop, Baristo, which is planning to expand its locations around the city. Under the agreement,Baristo asks Butler to retain these fireplaces in its warehouses until the new coffee shops thatwill house the fireplaces are ready. Title passes to Baristo at the time the agreement is signed.Question:When should Butler recognize the revenue from this bill-and-hold arrangement?When to recognize revenue in a bill-and-hold arrangement depends when Baristo obtainscontrolof that product

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Term
Winter
Professor
conheady
Tags
Revenue, Generally Accepted Accounting Principles, Accounting software

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