ber Required: 1. Assess the five steps and determine when revenue should be recognized. 2. Prepare the appropriate journal entries that are required for the described transactions Solution A6-10 ASPE-Unconditional Right of Return: McLaughlin Novelty Corp. developed an unusual product, electric clip-on eyeglass wipers. McLaughlin felt the retail establishments were skeptical about the market appeal of the product, McLaughlin sold the product with a declining unconditional right of return for up to ten months, with 10% of the right-of-return amount of the purchase expiring every month for ten months. Thus, after the retailer had the product for one month, only 90% could be returned. After two months, only 80% could be returned, and after ten months, the right of return was fully expired. McLaughlin had no basis for estimating the amount of returns. Consistent with the terms McLaughlin offered its customers , all retailers paid cash when purchasing the clip-on-eyeglass wipers but received cash refunds if goods were returned. McLaughlin had its first sales of the product in September 20X5. Sales for the remainder of the year, and returns prior to 31 December 20X5, were as follows: Month of Sale Units Sold Sales Price Units Returned 10,000 $10 September October 2.500 1,000 10 12,000 15,000 November Monthly Sales $100,000 120,000 180,000 132.000 $532.000 12 1,000 December 11,000 12 0 Totals 48,000 4,500 Each unit of product costs McLaughlin $6 to produce. Chapter 6 Revenue Recognition 379 for Required: 1. Show the journal entries to record the four months of sales transactions, including the deferral of gross margin. Prepare one summary entry. 2 Show a summary entry to record the returns in 20X5. 3 Compute the amount that McLaughlin can record as realized) sales for 20X5. How much is gross margin? Record the revenue recognition entry. 4. For the above transactions, total returns in all of 20X6 were as follows: Month of Sale Units Returned 1,000 September October November December 2,000 2,500 4,000 Show the entries to record the returns in 20X6 and to record sales revenue and cost of sales from the 20XS shipments of this product. ** A6-11 IFRS-Licensing Fees: GoRight Inc. (GRI) is a franchisor who sells the rights to its trademark to franchisees. The franchisee pays an upfront, nonrefundable deposit of $1,000. This amount is used to cover the expenses for GRI preforming on the franchisee's background and credentials, intervisys