Details of this Paper

Revenue recognition at time of sale. Marks and Spe...

Description

Solution


Question

Revenue recognition at time of sale. Marks and Spencer Group. Plc., a U.K. retailer, applies IFRS and reports its results in millions of pounds sterling (?). The notes to its financial statements for the year ended March 29, 2008, provide the following information: ? Revenue comprises sales of goods to customers less an appropriate deduction for returns and discounts. Marks and Spencer records revenues for sales of furniture and items purchased online upon delivery to the customer. ? Marks and Spencer records trade receivables at their nominal amount less an allowance for any doubtful accounts and sales returns. The beginning balance in the allowance for uncollectible accounts and sales returns was ?1.1 million, and the ending balance was ?3.3 million. There were no recoveries of uncollectible accounts during the year. For the year ended March 29, 2008, Marks and Spencer reported revenues (before discounts and returns) of ?9,022.0 million. The cost of merchandise sold in 2008 was ?5535.2 million. Assume that Marks and Spencer estimates discounts and returns of 1% of sales. Further assume that it made all sales on credit and that it estimates that 1.5% of revenue will be uncollectible. a. What journal entry did Marks and Spencer record during the ar ended March 29, 2008, to recognize revenues and expenses? b. What journal entry did Marks and Spencer make in the year ended March 29, 2008, to recognize sales returns and bad debts expense? c. What wits the combined amount of sales returns and write-offs of uncollectible accounts during the year ended March 29, 2008? SOLUTION (Marks and Spencer; revenue recognition at time of sale.) (a) Journal entry to recognize revenues and expenses: Accounts Receivable, Gross 9,022.0 Cost of Goods Sold 5,535.2 Sales Revenue _____? Merchandise Inventory _____? (b) Journal entry to recognize sales returns and bad debts expense (combined): Sales Returns 90.22 Bad Debt Expense 135.33 Allowance for Doubtful Accounts and Sales Returns ______? (c) Beginning Balance, Allowance ? 1.10 Sales Returns 90.22 Bad Debt Expense _____? Less Ending Balance, Allowance (3.30) Total Returns and Writeoffs ? 223.35 I just need the four blank answers, what i came up with was wrong. thanks

 

Paper#8094 | Written in 18-Jul-2015

Price : $25
SiteLock