Question

Crane-Air is selling a new model of high-efficiency air conditioner. To stimulate interest, Crane-Air is granting certain large customers the unconditional right to return these air conditioners if not fully satisfied. The right of return extends for six months. Crane-Air estimates returns of 9%. Crane-Air sells these air conditioners on account for $18,520,000 (cost $12,038,000) on April 2, 2017. Customers are required to pay the full amount due by June 15, 2017. Prepare the journal entry for Crane-Air on April 2, 2017. Use the gross method to record sales. (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 O for the amounts.) Account Titles and Explanation Debit Credit (To record sales) (To record cost of goods sold) e Textbook and Media List of Accounts

Answer 1

Date	Gross method				Net method	Debit	Credit
		Debit	Credit		Accounts receivable	16853200
Apr 2,2017	Accounts receivable	18520000			Sales revenue		16853200
	Sales revenue		18520000		(To record Sales)
	(To record Sales)				18520000*(1-9%)
	Cost of goods sold	12038000			Cost of goods sold	12038000
	Inventory		12038000		Inventory		12038000
	(To record cost of goods sold)				(To record cost of goods sold)
15-May	Sales returns	388000			NO Entry
	Accounts Receivable		388000
	(To record sales returns)
	Inventory	252200			Inventory	252200
	COGS		252200		COGS		252200
	(To record Cost of goods returned)				(To record Cost of goods returned)
	(12038000/18520000*388000)				(12038000/18520000*388000)
15-Jun	Cash	18132000			Cash	18132000
	Accounts Receivable		18132000		Accounts Receivable		18132000
	(18520000-388000)				(18520000-388000)
30-Jun	Sales returns	1250000
	Allowance for A/cs receivables		1250000		No entry
	NOTE:There is still 3 months pending for unconditional return by the customer,				Provision is done by the 1st JE itself.
	Inventory had not come in.
	only sales can be recorded at conservative estimates.