Codification Research & Analysis

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Thursday morning your meeting with your staff accountants ends. You return to your desk to find an email from one of your favorite clients, a friendly serial entrepreneur. Now that you are a manager youre really starting to enjoy the relationships you are building with your clients.

The client tells you that in her latest start-up, a hardware store, she is going to begin to offer customer incentives, specifically, 11% mail-in rebates to customers on purchases from time to time, like Menards.

She is starting the conversation today because the quarter is about to end and she would like to begin offering the incentive the beginning of next quarter. Her other concern is that the amount of the incentive that will ultimately be paid to customers cannot be estimated. She has no experience with similar programs. She can, however, estimate gross revenue for the period will be $100,000.

You assure her youll have her problem solved in a moment. That is, you will tell her how to record revenue under these new circumstances. Then you log in to the Codification and look up the answer while you chat with and catch-up with this client.

You found the codification references: 605-50-25-3; 605-50-25-4; 605-50-55-88; 605-50-55-89. But now, you are trying to figure out what this all means:

Identify alternatives: _____________________________________________________________

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Evaluate & select proper alternative: ____________________________________________

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Communicate results by:

(1) Making the appropriate general journal entry:

(2) Explaining how your solution affects the Balance Sheet and Income Statement (For instance, Assets and Net Income)