Question

10A-14 10A-3. GLOBAL supermarkets of Bunol. Spain runs a special on tomatoes during the annual La Tomatina festival'. They also run a money-back guarantee for anyone with unused tomatoes who is not completely satisfied with their aerodynamic qualities. From past history, GLOBAL knows that only 1.5% of the tomatoes will be returned. This year they sell 400,000 kilograms of tomatoes at a price of 0.40 euros per kilo. Required: 1. Show the adjusting T-account entry necessary to record the liability created by the money-back guarantee. 2. Show the entry that GLOBAL will have to make when a soggy-but-happy customer returns a kilo of tomatoes sometime after the adjusting entry in requirement 1 is made.

Answer 1

S01- Given data. 6 Bucol. Spain suns a Special GLOBAL Supermarkets Tomatina festival. during the annual La on tomatoes guarantee for anyone with unused - The money back tomotoes - GLOBAL knows that only 15% of tomatoes. - This year they sell 400.000 kilograms of Zomatoes. =) price of 0.40 euros per kilo. D credit (CO Debitoo Guarantee expenses Account Amount Amount 2.400 To Guarantee liability (400.000X1-5% 4040 By Income slate -ment 2.400 2. 2.400 2.400 GLOBAL will have to make when a soggy - but happy Customer petusos a lot tomatoes sometime after the adjusty en-9 in begun ter the adjusting entry in requirement A is made

Debit cor) Guarantee liability Account credit (CO) Amount (0) Amount (E) By guarantee Supenses 2.400.00 TO cash 0.40 TO Balonce od 2.399.60 8.400.00 2.400.00 Credito Cash Account Debit (or) Amount Amount (6) By gucsantee liabili 10.40 of By guarantee expenses in Guerantee liability Account is By guarantee expenses - 400.000 X1.5%040 2.400.00 3. TO Balance ud 9.100.00 -1.5% X100 3 2.39999850 To Balance clo & 2.399.60