Consider the following independent situations. Prepare responses to each as indicated.
1. Richardson Company sells goods and offers rebates to customers based on volume purchased. For the first 10,000 units sold, it grants a rebate of 1%. If it sells up to 15,000 units, it will grant a rebate of 2%. If it sells over 25,000 units, it will grant a rebate of 3%. In the first quarter of the year,
Richardson sells 12,000 units for $220,000. Based on past experience, Richardson has sold over 30,000 units, with sales normally taking place in the third quarter of the year. Prepare the journal entry to record the sale of the 12,000 units in the first quarter of the year.
2. Longnecker Company offers layaway sales to its customers. Assume that Longnecker sells €200,000 of merchandise to Perrywinkle Inc. on April 1, 2010, and Perrywinkle chooses to use the layaway plan. Longnecker therefore retains the goods, segregating them from other goods for sale, and accepts a cash deposit for the sale of €2,000. Longnecker requires that final payment be made in 60 days (if the remaining portion of the sales price is not paid, the deposit is forfeited). Longnecker is not sure that Perrywinkle will make the full payment due on these sales, because the deposit is not that large. Prepare the journal entry (if any) to record the transaction on April 1, 2010.
3. On December 31, 2010, Pico Company sells production equipment to Franco plc for £100,000. Pico includes a 1-year warranty service contract with the sale of all its equipment. The customer receives and pays for the equipment on December 31, 2010. Pico estimates the prices to be £98,000 for the equipment and £3,000 for the warranty. Prepare the entry to record the sale on December 31, 2010.