Question

Sage Company is presently testing a number of new agricultural seeds that it has recently harvested. To stimulate interest, it has decided to grant to five of its largest customers the unconditional right of return to these products if not fully satisfied. The right of return extends for 4 months. Sage estimates returns of 20%. Sage sells these seeds on account for $1,500,000 (cost $825,000) on January 2, 2017. Customers are required to pay the full amount due by March 15, 2017.

Prepare the journal entry for Sage at January 2, 2017. (Credit account titles are automatically indented when 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.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 2, 2017
	(To recognize revenue.)
	(To record cost of goods sold.)

Assume that one customer returns the seeds on March 1, 2017, due to unsatisfactory performance. Prepare the journal entry to record this transaction, assuming this customer purchased $90,000 of seeds from Sage and also record the entry required to pay the full amount due by March 15, 2017. (Credit account titles are automatically indented when 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.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 2, 2017Mar. 1, 2017Mar. 15, 2017Mar. 31, 2017
	(To record sales returns)
	(To record cost of goods returned)
Jan. 2, 2017Mar. 1, 2017Mar. 15, 2017Mar. 31, 2017

Assume Sage prepares financial statements quarterly. Prepare the necessary entries (if any) to adjust Sage’s financial results for the above transactions on March 31, 2017, assuming remaining expected returns of $210,000. (Credit account titles are automatically indented when 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.)

Date	Account Titles and Explanation	Debit	Credit
Mar. 31, 2017
	(To record sales returns)
	(To record cost of goods returned)

Answer 1

Answer Page No ③ o Jacanal entry for Sogs at January , 2014 Date Particular Debito Gedit Accounts receivable *1500,000 Şales Grevenue - $1500,000 Jana, 2017 $ 825000 - Cost of goods sold Inventory $825000 Towinal enties te record sales retirement en coof of goods preturned $825000 Returned y $90,000 inventory O $1500,000 = * 49500 Accounts oreceivable = $1500,000 - $90,000 2$ 1410,000

Page No ① Debit Credit Date 1 . Particular Marchi, Sales relain & allowances Accounts occeivable $90,000 2019 $90,000 $ 49500 * 49500 Returned inventory cost of goods sold March 15, cash 2017 Accounts receivable $ 1410000 $ 1410,000 13 herpet மாக Cost gf estimated goods oreturned a $826000 x$210,000 .$1500,000 = $ 115500 Particular Debit Credit May 31, Sales retur rus E allowances $210,000 Allowances for sales retanos E allowances - $210,000 Estimated Inventory refwins $ 115500 Cost of goods sold $115500 Date 2017