Question

Crane Ranch & Farm is a distributor of ranch and farm equipment. Its products range from small tools, power equipment for trench-digging and fencing, grain dryers, and bam winches. Most products are sold direct via its company catalog and Internet site. However, given some of its specialty products, select farm implement stores carry Crane's products. Pricing and cost information on three of Crane's most popular products are as follows. Standalone Selling Price (Cost) ($2,000 ) (900 ) (11,000 ) Item Mini-trencher Power fence hole auger Grain/hay dryer $ 3,900 1,300 12,900 Respond to the requirements related to the following independent revenue arrangements for Crane Ranch & Farm. On January 1, 2020, Crane sells 40 augers to Mills Farm & Fleet for $52,000. Mills signs a 6-month note at an annual interest rate of 12%. Crane allows Mills to return any auger that it cannot use within 70 days and receive a full refund. Based on prior experience, Crane estimates that 5% of units sold to customers like Mills will be returned (using the most likely outcome approach). Crane's costs to recover the products will be immaterial, and the returned augers are expected to manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) resold at a profit. Prepare the journal entry for Crane on January 1, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent Account Titles and Explanation Debit Credit (To record sales) (To record cost of goods sold) SHOW LIST OF ACCOUNTS LINK TO TEXT On August 10, 2020, Crane sells 15 mini-trenchers to a farm co-op in westerm Minnesota on account. Crane provides a 4% volume discount on the mini-trenchers if the co-op has a 15% increase in purchases from Crane compared to the prior year. Given the slowdown in the farm economy, sales to the co-op have been flat, and it is highly uncertain that the benchmark will be met. Prepare the journal entry for Crane on August 10, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit (To record sales) (To record cost of goods sold)

Answer 1

Please find below table useful to compute desired results: -

A E =11000*3 G 01-10-2017. Cost of Goods Sold =12 Inventory (To Record the Cost of Goods Sold) 31-12-2017. Uneamed Service Revenue (Service Palns) =15 Service Revenue (Service Plans) Dryers (3 * $14.000) =12900*3 Installation (3 * $1,000) =1000*3 Maintenance Plan 1200 Total Estimated Fair Value =SUM(L 1:L3) =L8*3/36 Drvers Entries for Ritt No Entry - Inventory continues to be Controlled =L1/L4*L9 =L2/L4*L9 =L3/L4*L9 41800 8 Installation Maintenance Plan Total contract price 25-04-2017. =((70*1300-(10%*70*1300) =112*10% 30-06-2017. Cash Consignment Expense Sales Revenue Cost of Goods Sold Inventory =70*1300 =70*900 =H13 C D 1 Date Account Title and Explanation Debit Credit 2 01-01-2017. Notes Receivable Mills) 52000 3 A. Refund Liability =5%*C2 Sales Revenue =C2-D3 (To Record the Sales) Cost of Goods Sold =D8-C7 Estimated Inventory Retums =D8*5% Inventory |=40*900 (To Record the Cost of Goods Sold) 10 10-08-2017. Cash =15*3900 11 B.. Sales Revenue 12 (To Record the Sales) 13 Cost of Goods Sold D14 14 Inventory =15*2000 15 (To Record the Cost of Goods Sold) 16 20-06-2017. Cash =41800*20% 17 C.. Accounts Receivable =45200-C16 18 Unearned Service Revenue (Installation) Uneamed Service Revenue Maintenence Plan) 20 Uneamed Sales Revenue (Dryers) =L6 21 (To Record the Agreement to Sell and Install Dyers and Maintenance Plan) 22 01-10-2017. Cash =41800*80% Accounts Receivable =C22 (To Record Payment Method) Uneamed Service Revenue (Installation) =D18 Uneamed Sales Revenue Dryers) =D20 Service Revenue (Installation) =C25 Sales Revenue Dryers) =C26 (To Record the Sales) 25-04-2017. Entries for Depot No Entry - Inventory continues to be Controlled Summary Entry for Consignment Sales |=120+121 Due to Ritt (Consignment) Uneared Service Revenue (Consignments) 19 =18 Cash =120 =121 30-06-2017. Due to Ritt Uneamed Service Revenue (Consignments) Service Revenue (Consignments) Cash

End results would be as follows: -

B H $33,000 $33,000 E F 01-10-2017. Cost of Goods Sold Inventory (To Record the Cost of Goods Sold) 31-12-2017. Unearned Service Revenue (Service Palns) Service Revenue (Service Plans) J K Dryers (3 * $14.000) Installation (3 * $1.000) Maintenance Plan Total Estimated Fair Value $38.700 $3,000 $1,200 $42.900 $97 $97 Entries for Ritt No Entry - Inventory continues to be Controlled Dryers Installation Maintenance Plan Total contract price $37.707.69 $2.923.08 $1,169.23 $41,800 25-04-2017 81900 $9.100 30-06-2017. Cash Consignment Expense Sales Revenue Cost of Goods Sold Inventory $91,000 13 А C D 1 Date Account Title and Explanation Debit Credit 2 01-01-2017. Notes Receivable (Mills) $52.000 3 A. Refund Liability $2.600 Sales Revenue $49,400 (To Record the Sales) Cost of Goods Sold $34,200 Estimated Inventory Returns $1.800 Inventory $36.000 (To Record the Cost of Goods Sold) 10 10-08-2017. Cash $58,500 11 B.. Sales Revenue $58.500 (To Record the Sales) Cost of Goods Sold $30,000 14 Inventory $30,000 15 (To Record the Cost of Goods Sold) 16 20-06-2017. Cash $8.360 17 Accounts Receivable $36.840 Unearned Service Revenue (Installation) $2,923 Unearned Service Revenue (Maintenence Plan) $1.169 Unearned Sales Revenue (Dryers) $37,708 (To Record the Agreement to Sell and Install Dyers and Maintenance Plan) 22 01-10-2017. Cash $33,440 Accounts Receivable $33,440 (To Record Payment Method) Unearned Service Revenue (Installation) $2.923 Unearned Sales Revenue Dryers) $37,708 Service Revenue (Installation) $2.923 Sales Revenue (Dryers) $37.708 $63.000 $63.000 Entries for Depot 25-04-2017. No Entry - Inventory continues to be Controlled Summary Entry for Consignment Sales Cash Due to Ritt (Consignment) Unearned Service Revenue (Consignments) $91.000 $81.900 $9.100 $81.900 $9.100 30-06-2017. Due to Ritt Unearned Service Revenue (Consignments) Service Revenue (Consignments) Cash 9.100 $81,900 Activate Windows Go to Settings to activate Windows