On 1 January 2019, Entity A sold 100 units of Product X to a customer for $220
Question:
On 1 January 2019, Entity A sold 100 units of Product X to a customer for $220 per unit payable on 31 December 2019. On the same date, the cash selling price of 1 unit of Product X is $200. The customer obtained control of the product at contract inception.
However, the contract permits the customer to return the product within 90 days, i.e. on or before 31 March 2019. The product is new and Entity A has no relevant historical evidence of product returns or other available market evidence.
On 31 March 2019, 5 units of Product X was returned.
On 31 December 2019, all outstanding amount was settled.
The cost of 1 unit of Product X to Entity A is $150. The end or reporting period of Entity A is 31 December.
REQUIRED:
Provide journal entries for Entity A from 1 January 2019 to 31 December 2019 in accordance with relevant accounting standards.
Fundamental Accounting Principles Volume 1
ISBN: 9781259259807
15th Canadian edition
Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann