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Chapter 18: Q.18-8P_2 (page 1045)

Question: P18-8 (LO2,3) (Time Value, Gift Cards, Discounts) Presented below are two independent revenue arrangements for Colbert Company.

Instructions

Respond to the requirements related to each revenue arrangement.

(b) Colbert sells 20 nonrefundable \(100 gift cards for 3D printer paper on March 1, 2017. The paper has a standalone selling price of \)100 (cost $80). The gift cards expiration date is June 30, 2017. Colbert estimates that customers will not redeem 10% of these gift cards. The pattern of redemption is as follows.

Redemption total

March 31

50%

April 30

80

June 30

85

Prepare the 2017 journal entries related to the gift cards at March 1, March 31, April 30, and June 30.

Short Answer

Expert verified

Answer

Both sides of the Journal total$5,060.

Step by step solution

01

Definition of Non-Refundable

The fees taken by any institute or any consultant which is not subjected to be refunded in any case is known as non-refundable.

02

Journal entries for 2017

Date

Accounts and Explanation

Debit $

Credit $

1 March 2017

Cash

$2,000

Unearned sales revenue

$2,000

31 March 2017

Unearned sales revenue

$1,000

Sales revenue

$1,000

31 March 2017

Cost of goods sold

$800

Inventory

$800

30 April 2017

Unearned sales revenue

$600

Sales revenue

$600

30 April 2017

Cost of goods sold

$480

Inventory

$480

30 June 2017

Unearned sales revenue

$100

Sales revenue

$100

30 June 2017

Cost of goods sold

$80

Inventory

$80

$5,060

$5,060

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Instructions

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