Revenue tutorial week 4 intermediate Accounting PDF

Preview

Summary

These are the answers to one of the revenue tutorials for ACCTN202...

Description

REVENUE TUTORIALS 1 INTEREST REVENUE On 1 April 2017, Jusco Limited made credit sales of $1,800,000 to a regular wholesale customer. According to the terms of payment, the credit sales were to be settled in 5 annual instalments of $536,961 per annum. Interest is charged at 15% per annum. The financial year end for Jusco Limited is 31 March. Required Prepare journal entries to account for the revenues earned for the year ended 31 March 2018. Assume that Jusco limited uses the net interest method to account for interest revenue. Date

1/4/2017 31/3/18

1/4/2017

31/3/2018

Annual Instalment

Interest Revenue 15%

Payment of Accounts Receivable

Balance of Accounts Receivable outstanding

RIGHT OF RETURN For the year ended 31st December 2013, Noel Stores made cash sales of electrical appliance for $3,500,000. The cost of goods sold is 80% of sales. The cash sales were subject to a right of return clause by which customers are entitled to a full refund of the sales price if items are returned to Noel Stores within 3 months of purchase. The sales are also subject to a warranty clause by which Noel Stores undertakes to repair any defective items that are returned within a period of 6 months from the date of sale. During the year ended 31 st December 2013, Nole Stores made refunds of $130,000 and paid for repair costs of $20,000 for defective electrical appliances. As at 31st December 2013, the right of return privilege for sales amounting to $3,000,000 had expired. The right of return privilege for the balance of sales made during the year ended 31st December 2013 is expected to expire in the following financial year. Noel Stores only accounts for sale when rights of return privilege expire. The accounting year end of the company is 31st December. Required: Prepare general journal entries (without narrations) to account for all transactions for the year ended 31st December 2013. Debit

Credit...