Answered step by step
Verified Expert Solution
Link Copied!
Question
1 Approved Answer

Revenue Recognition and Sales Allowances accounting purposes ) . The goods are shipped from the warehouse on March 6 , and FedEx confirms delivery on

Revenue Recognition and Sales Allowances accounting purposes). The goods are shipped from the warehouse on March 6, and FedEx confirms delivery on March 7. Ignore shipping costs, sales tax, and returns.
Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction.
Note: Indicate a decrease in an account category by including a negative sign with the amount.
c. Use the financial statement effects template to record the gift card activity during the fiscal year ended February 2,2019. Ignore sales tax and returns. Details are as follows.
Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction.
Note: Indicate a decrease in an account category by including a negative sign with the amount.
\table[[$ millions],[Gift card liability, February 3,2018,$640],[Gift cards issued during current period but not redeemed,568],[Revenue recognized from beginning liability,(468)],[Gift card liability, February 2,2019,$740]] b. Use the financial statement effects template to record the following transaction: On March 4, an internet customer places an order for $1,760 and pays online with a credit card (which is equivalent to cash for
accounting purposes). The goods are shipped from the warehouse on March 6, and FedEx confirms delivery on March 7. Ignore shipping costs, sales tax, and returns.
Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction.
Note: Indicate a decrease in an account category by including a negative sign with the amount.
c. Use the financial statement effects template to record the gift card activity during the fiscal year ended February 2,2019. Ignore sales tax and returns. Details are as follows.
Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction.
Note: Indicate a decrease in an account category by including a negative sign with the amount.
Target Corporation reported the following on its income statement.
The revenue recognition footnote from the 10-K for the year ended February 2,2019, includes the following.
We record almost all retail store revenues at the point of sale.
Digital channel sales include shipping revenue and are recorded upon delivery to the guest or upon guest pickup at the store.
Total revenues do not include sales tax because we are a pass-through conduit for collecting and remitting sales taxes.
Generally, guests may return national brand merchandise within 90 days of purchase and owned and exclusive brands within one year of purchase. Revenues are recognized net of expected returns, which we
estimate using historical return patterns as a percentage of sales and our expectations of future returns.
Revenue from gift card sales is recognized upon gift card redemption. Our gift cards do not expire. Based on historical redemption rates, a small and relatively stable percentage of gift cards will never be redeemed,
referred to as "breakage." Estimated breakage revenue is recognized over time in proportion to actual gift card redemptions.
Guests receive a 5 percent discount on virtually all purchases and receive free shipping at
Target.com when they use their REDcard. This discount is included as a sales reduction in our Consolidated Statements of
Operations and was $839 million, $821 million, and $791 million in the fiscal years ended February 2019,2018, and 2017 respectively.
Required
a. Use the financial statement effects template to record retail cash sales of $880 in a state with a sales tax rate of 8%. For this question, assume 10% of all merchandise sold is returned within 90 days.
Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction.
Note: Indicate a decrease in an account category by including a negative sign with the amount.
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image
Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting

Authors: Charles T. Horngren, Walter T. Harrison, Linda S. Bamber, Betsy Willis, Becky Jones

5th Edition

0130906999, 978-0130906991

More Books

Students also viewed these Accounting questions