Presented below are two independent revenue arrangements for Colbert Company.
Instructions
Respond to the requirements related to each revenue arrangement.
a. Colbert sells 3D printer systems. Recently, Colbert provided a special promotion of zero-interest financing for 2 years on any new 3D printer system. Assume that Colbert sells Lyle Cartright a 3D system receiving a $5,000 zero-interest-bearing note on January 1, 2019. The cost of the 3D printer system is $4,000. Colbert imputes a 6% interest rate on this zero-interest note transaction. Prepare the journal entry to record the sale on January 1, 2019, and compute the total amount of revenue to be recognized in 2019.
b. Colbert sells 20 non-refundable £100 gift cards for 3D cartridges on March 1, 2019. The cartridges have a standalone selling price of £100 (cost £80). The gift cards expiration date is June 30, 2019. Colbert estimates that customers will not redeem 10% of these gift cards. The pattern of redemption is as follows.
Redemption Total
March 31........................50%
April 30.............................80
June 30..............................85
Prepare the 2019 journal entries related to the gift cards at March 1, March 31, April 30, and June 30.