Current Attempt in Progress Sheridan Ranch & Farm is a distributor of ranch and farm equipment. Its products range from small tools, power equipment for trench- digging and fencing, grain dryers, and barn winches. Most products are sold direct via its company catalog and Internet site. However, given some of its specialty products, select farm implement stores carry Sheridan's products. Pricing and cost information on three of Sheridan's most popular products are as follows. Item Standalone Selling Price (Cost) Mini-trencher $3,800 ($1,800) Power fence hole auger 1,100 (900) Grain/hay dryer 13.500 (11,300) Respond to the requirements related to the following independent revenue arrangements for Sheridan Ranch & Farm. (a) Your answer is partially correct. On January 1, 2020, Sheridan sells 40 augers to Mills Farm & Fleet for $44,000. Mills signs a 6-month note at an annual interest rate of 12%. Sheridan allows Mills to return any auger that it cannot use within 50 days and receive a full refund. Based on prior experience, Sheridan estimates that 5% of units sold to customers like Mills will be returned (using the most likely outcome approach). Sheridan's costs to recover the products will be immaterial, and the returned augers are expected to be resold at a profit. Prepare the journal entry for Sheridan on January 1, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Accounts Receivable Sales Revenue (To record sales) Notes Receivable Accounts Receivable (To record cost of goods sold) Debit 44,000 44,000 Credit 44,000 44,000 (b) On August 10, 2020, Sheridan sells 15 mini-trenchers to a farm co-op in western Minnesota on account. Sheridan provides a 4% volume discount on the mini-trenchers if the co-op has a 15% increase in purchases from Sheridan compared to the prior year. Given the slowdown in the farm economy, sales to the co-op have been flat, and it is highly unlikely that the benchmark will be met. Prepare the journal entry for Sheridan on August 10, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Account Titles and Explanation (To record sales) (To record cost of goods sold) eTextbook and Media Debit Credit (c) Sheridan sells three grain/hay dryers to a local farmer at a total contract price of $44,000. In addition to the dryers, Sheridan provides installation, which has a standalone selling price of $1,100 per unit installed. The contract payment also includes a $1,200 maintenance plan for the dryers for 3 years after installation. Sheridan signs the contract on June 20, 2020, and receives a 20% down payment from the farmer. The dryers are delivered and installed on October 1, 2020, and full payment is made to Sheridan. Prepare the journal entries for Sheridan in 2020 related to this arrangement. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Round answers to O decimal places, e.g. 5,275.) Date Jun. 20, 2020 Account Titles and Explanation (To record payment received) Debit Credit (To record payment received) (To record sales) (To record cost of goods sold) eTextbook and Media (d) On April 25, 2020, Sheridan ships 100 augers to Farm Depot, a farm supply dealer in Nebraska, on consignment. By June 30, 2020, Farm Depot has sold 50 of the consigned augers at the listed price of $1,100 per unit. Farm Depot notifies Sheridan of the sales, retains a 10% commission, and remits the cash due Sheridan. Prepare the journal entries for Sheridan and Farm Depot for the consignment arrangement. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Date Entries for Sheridan Account Titles and Explanation Debit Credit Jun. 30, 2020 (To record payment received) Entries for Farm (To record cost of sales) Depot > > (To record consignment sales) (To record payment)