AC 302 WEEK 1 Willy Exercises

AC 302 WEEK 1 Willy Exercises 
In September 2014, Gaertner Corp. commits to selling 154 of its iPhone-compatible docking stations to Better Buy Co. for $15,400 ($100 per product). The stations are delivered to Better Buy over the next 6 months. After 116 stations are delivered, the contract is modified and Gaertner promises to deliver an additional 58 products for an additional $5,510 ($95 per station). All sales are cash on delivery.

Prepare the journal entry for Gaertner for the sale of the first 116 stations. The cost of each station is $56. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Account Titles and Explanation	Debit	Credit
  
  
  

  
  
  

(To record the sale)		
  
  
  

  
  
  

(To record cost of goods sold)		

Prepare the journal entry for the sale of 10 more stations after the contract modification, assuming that the price for the additional stations reflects the standalone selling price at the time of the contract modification. In addition, the additional stations are distinct from the original products as Gaertner regularly sells the products separately. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Account Titles and Explanation	Debit	Credit
  
  
  

  
  
  

(To record the sale)		
  
  
  

  
  
  

(To record cost of goods sold)		


Prepare the journal entry for the sale of 10 more stations (as in (b)), assuming that the pricing for the additional products does not reflect the standalone selling price of the additional products and the prospective method is used. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 52.75.)
Account Titles and Explanation	Debit	Credit
  
  
  

  
  
  

(To record the sale)		
  
  
  

  
  
  

(To record cost of goods sold)		


Exercise 18A-7
On June 3, 2014, Hunt Company sold to Ann Mount merchandise having a sales price of $9,360 (cost $6,552) with terms of 2/10, n/60, f.o.b. shipping point. Hunt estimates that merchandise with a sales value of $936 will be returned. An invoice totaling $140, terms n/30, was received by Mount on June 8 from Olympic Transport Service for the freight cost. Upon receipt of the goods, on June 5, Mount notified Hunt that $351 of merchandise contained flaws. The same day, Hunt issued a credit memo covering the defective merchandise and asked that it be returned at Hunt- expense. Hunt estimates the returned items to have a fair value of $140. The freight on the returned merchandise was $28, paid by Hunt on June 7. On June 12, the company received a check for the balance due from Mount.

Prepare journal entries for Hunt Company to record all the events noted above assuming sales and receivables are entered at gross selling price. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.)
Date	Account Titles and Explanation	Debit	Credit
June 3, 2014	  
  
  

	  
  
  

	  
  
  

	(To record sale)		
	  
  
  

	  
  
  

	  
  
  

	(To record cost of goods sold)		
June 5, 2014	  
  
  

	  
  
  

	(To record Refund Liability)		
	  
  
  

	  
  
  

	(To record Estimated Inventory Returns)		
June 7, 2014	  
  
  

	  
  
  

	(To record delivery cost)		
June 12, 2014	  
  
  

	  
  
  

	  
  
  

	(To record payment)		

Prepare the journal entry assuming that Ann Mount did not remit payment until August 5. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.)
Date	Account Titles and Explanation	Debit	Credit
August 5, 2014	  
  
  

	  
  
  



Exercise 18A-9
Sanchez Co. enters into a contract to sell Product A and Product B on January 2, 2014, for an upfront cash payment of $168,000. Product A will be delivered in 2 years (January 2, 2016) and Product B will be delivered in 5 years (January 2, 2019). Sanchez Co. allocates the $168,000 to Products A and B on a relative standalone selling price basis as follows.
		Standalone
Selling Prices		Percent
Allocated		Allocated
Amounts	
Product A			$	44,800			25%			$	42,000		
Product B				134,400			75%				126,000		
			$	179,200						$	168,000		

Sanchez Co. uses an interest rate of 6%, which is its incremental borrowing rate.

(Hint: Given the (discounted) upfront payment, accretion of the contract liability will need to be recorded.)

Prepare the journal entries necessary on January 2, 2014, and December 31, 2014. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.)
Date	Account Titles and Explanation	Debit	Credit
January 2, 2014	  
  
  

	  
  
  

	(To record upfront payment for sales of products A and B)		
December 31, 2014	  
  
  

	  
  
  

	(To record interest on the contract liability (Unearned Sales Revenue))		



Show List of Accounts

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 	Prepare the journal entries necessary on December 31, 2015. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.)
Date	Account Titles and Explanation	Debit	Credit
December 31, 2015	  
  
  

	  
  
  

	(To record interest on the contract liability)		




Show List of Accounts

Link to Text
			


	 
 
 	Prepare the journal entries necessary on January 2, 2016. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.)
Date	Account Titles and Explanation	Debit	Credit
January 2, 2016	  
  
  

	  
  
  

	(To record revenue on transfer of product A)		
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