Problem 18-05 (Part Level Submission)

Windsor Ranch & Farm is a distributor of ranch and farm equipment. Its products range from small tools, power equipment for trench-digging and fencing, grain dryers, and barn winches. Most products are sold direct via its company catalog and Internet site. However, given some of its specialty products, select farm implement stores carry Windsors products. Pricing and cost information on three of Windsors most popular products are as follows.

Item		Standalone Selling Price (Cost)
Mini-trencher		$ 3,800	($2,200	)
Power fence hole auger		1,000	(800	)
Grain/hay dryer		14,800	(10,100	)

Respond to the requirements related to the following independent revenue arrangements for Windsor Ranch & Farm.

(a)

On January 1, 2020, Windsor sells 40 augers to Mills Farm & Fleet for $40,000. Mills signs a 6-month note at an annual interest rate of 12%. Windsor allows Mills to return any auger that it cannot use within 50 days and receive a full refund. Based on prior experience, Windsor estimates that 5% of units sold to customers like Mills will be returned (using the most likely outcome approach). Windsors costs to recover the products will be immaterial, and the returned augers are expected to be resold at a profit. Prepare the journal entry for Windsor on January 1, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
(To record sales)
(To record cost of goods sold)