1-A

Ski West, Inc., operates a downhill ski area near Lake Tahoe, California. An all-day adult lift ticket can be purchased for $80. Adult customers also can purchase a season pass that entitles the pass holder to ski any day during the season, which typically runs from December 1 through April 30. Ski West expects its season pass holders to use their passes equally throughout the season. The companys fiscal year ends on December 31.

On November 6, 2021, Jake Lawson purchased a season pass for $425.

Required:

1. When should Ski West recognize revenue from the sale of its season passes?
2. Prepare the appropriate journal entries that Ski West would record on November 6 and December 31.
3. What will be included in the Ski West 2021 income statement and balance sheet related to the sale of the season pass to Jake Lawson?

1-B

During 2021, its first year of operations, Hollis Industries recorded sales of $11,700,000 and experienced returns of $650,000. Cost of goods sold totaled $8,190,000 (70% of sales). The company estimates that 7% of all sales will be returned. Prepare the year-end adjusting journal entries to account for anticipated sales returns under the assumption that all sales are made for cash (no accounts receivable are outstanding)

1-C

During 2021, its first year of operations, Hollis Industries recorded sales of $12,300,000 and experienced returns of $790,000. Cost of goods sold totaled $7,380,000 (60% of sales). The company estimates that 8% of all sales will be returned. Prepare the year-end adjusting journal entries to account for anticipated sales returns, assuming that all sales are made on credit and all accounts receivable are outstanding.

1-D

Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2021 with a refund liability of $380,000. During 2021, Halifax sold merchandise on account for $12,300,000. Halifax's merchandise costs is 70% of merchandise selling price. Also during the year, customers returned $603,000 in sales for credit, with $333,000 of those being returns of merchandise sold prior to 2021, and the rest being merchandise sold during 2021. Sales returns, estimated to be 5% of sales, are recorded as an adjusting entry at the end of the year. Required:

1. Prepare entries to (a) record actual returns in 2021 of merchandise that was sold prior to 2021; (b) record actual returns in 2021 of merchandise that was sold during 2021; and (c) adjust the refund liability to its appropriate balance at year end. 2. What is the amount of the year-end refund liability after the adjusting entry is recorded?