Concept Introduction:
Accounting is an art of recording, classifying, analyzing and summarizing the financial statement to produce meaningful information and reports.
Accounting is done with two methods as follows:
Cash Basis accounting: Under the cash basis accounting all the cash receipts for the period are considered as revenue and all the cash payments for the period are considered as expenses and net income us calculated.
Accrual Basis accounting: Under the accrual basis, the revenue and expenses are recorded accreting to their accrual for the given period and cash receipts and payments are not considered to decide their accrual. The net income is calculated using the accrued revenue and accrued expenses belonging to the particular period.
To Calculate:
The Revenue recognized for the month of October by Heartstrings Gift Shoppe.
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Chapter 3 Solutions
Cornerstones of Financial Accounting
- Journal entry worksheet 1 2 3 4 5 6 7 8 9 10 Record sale of gift cards totaling $8,000. The cards are redeemable for merchandise within one year of the purchase date. Note: Enter debits before credits. Date January 02 General Journal Debit Creditarrow_forwardCurrent Attempt in Progress Pharoah Pet Supply Company billed its customers a total of $777,000 for the month of November. The total includes a 5% state sales tax. (a) Determine the proper amount of revenue to report for the month. Total sales revenue $ eTextbook and Mediaarrow_forwardneed help with full working and steps thanks answer in text Listed below are selected transactions of Solution Department Store for the current year ending December 31. a. On December 5, the store received $500 from the Jackson Players as a deposit to be returned after certain furniture to be used in stage production was returned on January 15. b. During December, cash sales totaled $798,000, which includes the 5% sales tax that must be remitted to the state by the fifteenth day of the following month. c. On December 10, the store purchased for cash three delivery trucks for $120,000. The trucks were purchased in a state that applies a 5% sales tax. d. The store determined it will cost $100,000 to restore the area (considered a land improvement) surrounding one of its store parking lots, when the store is closed in 2 years. Solution’s estimates the fair value of the obligation at December 31 is $84,000. Required: Prepare all the journal entries necessary to record the…arrow_forward
- G V Required information [The following information applies to the questions displayed below.] On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances: Accounts Cash Accounts Receivable Allowance for Uncollectible Accounts Inventory Land Equipment Accumulated Depreciation Accounts Payable Notes Payable (6%, due April 1, 2022) Common Stock Retained Earnings Totals # 3 54,645 E D During January 2021, the following transactions occur: January purchase date. 2 Sold gift cards totaling $10,000. The cards are redeemable for merchandise within one year of the January 6 Purchase additional inventory on account, $157,000. The cost of the units sold is $78,800. January 15 Firework sales for the first half of the month total $145,000. All of these sales are on account. C $ 4 R LL JUL 10 www. 8 I ( 9 ( J K A O 0 |6 L Parrow_forwardIdentifying and Recording Customer Option for Additional Merchandise A large clothing retailer chain, Koll’s, offers a sales incentive program where customers receive direct credit toward future purchases based upon the dollar amount of purchases today. For every $50 spent today, the customer will earn a $5 credit to be used at Koll’s in two weeks. The credit expires 5 days after it becomes active. Not all customers will redeem the credit in the 5-day window of time. Based upon historical trends, Koll’s estimates that 35% of the credits will be redeemed. a. Determine how many performance obligations are included in a sales transaction during the sales incentive program. Answerb. Assuming that Koll’s sold $700,000 of merchandise (cost of $280,000) during the first day of the sales incentive period, record the journal entry(ies) to record sales revenue. Assume all sales were cash sales.Note: Round each allocated transaction price to the nearest whole dollar. Performance…arrow_forwardKnowledge Check 01Equinox is a local boutique that sells gift cards especially before holidays. At November 30, the company’s Deferred gift card revenue account had a balance of $400. During December, the company sold additional gift cards in the amount of $5,000, customers redeemed $1,000 of gift cards, and unused gift cards in the amount of $300 expired. What is the balance of Deferred gift card revenue that will be reported at December 31?arrow_forward
- Identifying and Recording Customer Option for Additional Merchandise A large clothing retailer chain, Koll's, offers a sales incentive program where customers receive direct credit toward future purchases based upon the dollar amount of purchases today. For every $50 spent today, the customer will earn a $6 credit to be used at Koll's in two weeks. The credit expires 5 days after it becomes active. Not all customers will redeem the credit in the 5-day window of time. Based upon historical trends, Koll's estimates that 35% of the credits will be redeemed. a. Determine how many performance obligations are included in a sales transaction during the sales incentive program. Two performance obligations ◆ b. Assuming that Koll's sold $400,000 of merchandise (cost of $160,000) during the first day of the sales incentive period and 8,000, $6 credits were given, record the journal entry(ies) to record sales revenue. Assume all sales were cash sales. Note: Carry all decimals in calculations;…arrow_forwardApplying the revenue recognition principle Seacoast Magazine sells subscriptions for $36 for 18 issues. The company collects cash in advance and then mails out the magazines to subscribers each month. Apply the revenue recognition principle to determine When Seacoast Magazine should record revenue for this situation. The amount of revenue Seacoast Magazine should record for eight issues.arrow_forwardQuestion involving Revenue Recognition: How much revenue should be recognized by the following Company, in each of the month's of March, April, May, June, July, August, and September? A company pre-sells services to be performed from May through September, inclusive. If payment is made in full by April 1, a 4% discount is allowed. In March, 245 customers took advantage of the discount and purchased the services for $650 each. In June, 220 customers purchased the services for $785, and in July, 95 purchased it for the same price. For the customers who pay after May 1, services start in the month the customer makes the payment. Please explain for each month. Months $ March April May June July August Septemberarrow_forward
- Saved O Homework Baird Books buys books and magazines directly from publishers and distributes them to grocery stores. The wholesaler expects to purchase the following inventory: April $105,000 June May $125,000 Required purchases (on account) $137,000 Baird Books' accountant prepared the following schedule of cash payments for inventory purchases. Baird Books' suppliers require that 90 percent of purchases on account be paid in the month of purchase; the remaining 10 percent are paid in the month following the month of purchase. Required a. Complete the schedule of cash payments for inventory purchases by filling in the missing amounts. b. Determine the amount of accounts payable the company will report on its pro forma balance sheet at the end of the second quarte Complete this question by entering your answers in the tabs below. Required A Required B Complete the schedule of cash payments for inventory purchases by filling in the missing amounts. Schedule of Cash Payments for…arrow_forwardProblem Set A PROBLEM 9-11A Bell Florists sells flowers on a retail basis. Most of the sales are for cash however, a few steady customers have credit accounts. Bell's sales staff fills out a sales alip for each sale. There is a state retail sales tax of 5 percent, which is collected by the retailer and submitted to the state. The balances of the accounts as of March 1 have been recorded in the general ledger in your Working Papers or in CengageNow. The following represent Bell Florists' charge sales for March: Mar 4 Sold potted plant on account to C. Morales, sales slip no. 242, $27. plus sales tax of $1.35, total $28.35. 6 Sold floral arrangement on account to R. Dixon, sales slip no. 267, $54, plus sales tax of $2.70, total $56.70. 12 Sold corsage on account to B. Cox, sales slip no. 279, $16, plus sales tax of $0.80, total $16.80. 16 Sold wreath on account to All-Star Legion, sales slip no. 296, $104, plus sales tax of $5.20, total $109.20. 18 Sold floral arrangements on account to…arrow_forwardQUESTION 1 An animal shelter plans to sell T-shirts bearing their logo at an upcoming crafts fair. They find a supplier who charges $2.85 a piece for orange T-shirts. Printing the logo on the shirt requires an additional $0.70 per shirt. The group places an order for 300 T-shirts and pays a shipping fee of $22 upon receiving the T-shirts. The journal entry on the receipt date should include: a. A credit to inventory of $877 O b. A děbit to inventory of $855 O c. A credit to inventory of $1,065 O d. A debit to inventory of $1,087arrow_forward
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