To record the sale of the cameras and related cost of goods sold

on January 12, 2019

Accounts Receivable 10,000

Sales Revenue (100 × P100) 10,000

Cost of Goods Sold 6,000

Inventory (100 × P60 cost per unit) 6,000

To record the return of the two cameras on January 24, 2019

Sales Returns and Allowances 200

Accounts Receivable (2 × P100) 200

Returned Inventory 120

Cost of Goods Sold (2 × P60) 120

To record expected sales returns on January 31, 2019

Sales Returns and Allowances 100

Allowance for Sales Returns and allowances (1 × P100) 100

To record the expected return of the one camera and related reduction in Cost
of Goods Sold

Estimated Inventory Returns 60

Cost of Goods Sold (1 unit × P60 cost per unit) 60

 Sales revenue (100 × P100) P10,000

Less: Sales returns and allowances (P200 + P100) 300

Net sales 9,700

Cost of goods sold (97 units × P60 cost per unit) 5,820

Gross profit P 3,880

Statement of Financial Position

Accounts receivable (P10,000 − P200) P9,800

Less: Allowance for sales returns and allowances 100

Accounts receivable (net) P9,700

Returned inventory (including estimated) (3 × P60) 180

To record the sale of the cameras and related cost of goods sold on January 12, 2019

Cash 10,000

Sales Revenue (100 units × P100) 10,000

Cost of Goods Sold 6,000

Inventory (100 × P60 per unit) 6,000

To record the return of two cameras on January 24, 2019

Sales Returns and Allowances 200

Accounts Payable (2 units × P100) 200

Returned Inventory 120

Cost of Goods Sold (2 × P60 cost per unit) 120

To record expected sales returns on January 31, 2019

Sales Returns and Allowances 100

Accounts Payable(1 × P100) 100

To record the expected return of the one camera and related reduction in Cost of
Goods Sold
Estimated Inventory Returns 60

Cost of Goods Sold (1 × P60 cost per unit) 60

Sales revenue (100 × P100) P10,000

Less: Sales returns and allowances (P200 + P100) 300

Net sales 9,700

Cost of goods sold (97 units × P60 cost per unit) 5,820

Gross profit P 3,880

Cash (assuming no cash payments to date to Amaya) P10,000

Returned inventory (including estimated) (3 units × P60 cost per unit) 180

Accounts payable (P200 + P100) 300

Cash 100,000

Liability to Lane Company 100,000

Interest Expense 10,000

Liability to Lane Construction (P100,000 × 10%) 10,000

December 31, 2020

Interest Expense 11,000

Liability to Lane Company 11,000

Liability to Lane Construction 121,000

Cash (P100,000 + P10,000 + P11,000) 121,000

Solution: For Baristo to have obtained control of a product in a bill-and-hold
arrangement, all of the following criteria should be met:

a. The reason for the bill-and-hold arrangement must be substantive.

b. The product must be identified separately as belonging to Baristo.

c. The product currently must be ready for physical transfer to Baristo.

d. Butler cannot have the ability to use the product or to direct it to

another customer.
Butler makes the following entry to record the bill-and-hold sale
and related cost of goods sold.

March 1, 2019

Accounts Receivable 450,000

Sales Revenue 450,000

Cost of Goods Sold 280,000

Inventory 280,000
 The principal's performance obligation is to
provide goods or perform services for a
customer.

 The agent's performance obligation is to

arrange for the principal to provide these goods
or services to a customer.

 In these types of situations, amounts

collected on behalf of the principal are not
revenue of the agent. Instead, revenue for the
agent is the amount of the commission it
receives (usually a percentage of total revenue)
October 1, 2019

To record the sale of the Rollomatics and the related extended warranties:

Cash (P6,000,000 + P18,000) 6,018,000

Sales Revenue 6,000,000

Unearned Warranty Revenue 18,000

To record the cost of goods sold and reduce the inventory of Rollomatics:

Cost of Goods Sold 4,000,000

Inventory 4,000,000
November 22, 2019

To record the warranty costs incurred:

Warranty Expense 28,000

Salaries and Wages Payable 3,000

Inventory (parts) 25,000

December 31, 2019

To record the adjusting entry related to its assurance warranty at the end of the year:

Warranty Expense 44,000

Warranty Liability 44,000