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Ivanhoe Publishing Co
Ivanhoe Publishing Co. publishes college textbooks that are sold to bookstores on the following terms. Each title has a fixed wholesale price, terms f.o.b. shipping point and payment is due 60 days after shipment. The retailer may return a maximum of 30% of an order at the retailer's expense. Sales are made only to retailers who have good credit ratings. Past experience indicates that the normal return rate is 12% and the average collection period is 72 days. The company follows IFRS.
a) On August 8, 2020, Ivanhoe shipped books invoiced at $18,000,000 (cost $14,000,000). Prepare the journal entry to record this transaction, including the expected returns.
August 8, 2020
(three lines to refill; To record sale on account)
August 8, 2020
(three lines to refill; To record cost of goods sold)
b) On October 3, 2020, $1,700,000 million of the invoiced July sales were returned according to the return policy, and the remaining $16,300,000 million was paid. Prepare the journal entries for the return and payment.
October 3, 2020
(two lines to refill, To record return from the customer)
October 3, 2020
(two lines to refill, To record return of inventory)
October 3, 2020
(two lines to refill, To record collection on account)
c) On August 8, 2020, Ivanhoe shipped books invoiced at $18,000,000 (cost $14,000,000). Prepare the journal entry to record this transaction, including the expected returns. Ivanhoe follows ASPE.
August 8, 2020
(two lines to refill; To record sale on account)
August 8, 2020
(two lines to refill; To accrue for sales returns)
August 8, 2020
(three lines to refill; To record cost of goods sold)
d) On October 3, 2020, $1,700,000 million of the invoiced July sales were returned according to the return policy, and the remaining $16,300,000 million was paid. Prepare the journal entries for the return and payment. Ivanhoe follows ASPE.
October 3, 2020
(two lines to refill, To record return from the customer)
October 3, 2020
(two lines to refill, To record return of inventory)
October 3, 2020
(two lines to refill, To record collection on account)
Expert Solution
PFA
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