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Question 11 Part (0) On 1 April 2017 Jusco Limited made credit sales of $1,800,000 to a regular wholesale customer. According to the terms of payment, the credit sales were to be settled in 5 annual instalments of $536,961 per annum. Interest is charged at 15% per annum. The financial year end for Jusco Limited is 31 March Required Prepare journal entries to account for the revenues earned for the year ended 31 March 2018. Assume that Jusco limited uses the net interest method to account for interest revenue Question 11 Part () Texco Limited operates throughout New Zealand and provides a customer loyalty programme in which customers are granted loyalty points when they spend a specified amount on home appliances. These points can then be redeemed to purchase further goods from the company's departmental stores. During the reporting period to 31" December 2012 Texco Limited sold goods worth $15,000,000. The cost of stock sold was $8,000,000. In relation to the sale, Texco Stores Limited awarded 1,500,000 points to its customers. The fair value of cach loyalty point is estimated to be $0.01. When the awards scheme was set up, the management of the company expected 100% of these points to be redeemed. By the 31" December 2012, customers have redeemed 900,000 points in exchange for goods. The cost of the goods exchanged for the loyalty points was $5,000 For the reporting period ending 31" December 2013, the balance of the loyalty points was redeemed. The cost of the goods exchanged for the loyalty points was $3,000. Required: Prepare general journal entries to account for the award of the loyalty points for the year ended 31" December 2012 Prepare general journal entries to account for the redemption of the loyalty points and the cost of good exchanged for the years ended 31 December 2012 and 31" December 2013 Question 11: Part (ii For the year ended 31" December 2013, Noel Stores made cash sales of electrical appliance for $3,500,000. The cost of goods sold is 80% of sales. The cash sales were subject to a right of return clause by which customers are entitled to a full refund of the sales price if items are returned to Noel Stores within 3 months of purchase. The sales are also subject to a For the reporting period ending 31" December 2013, the balance of the loyalty points was redeemed. The cost of the goods exchanged for the loyalty points was $3,000. Required: (a) Prepare general journal entries to account for the award of the loyalty points for the year ended 31 December 2012. (6) Prepare general journal entries to account for the redemption of the loyalty points and the cost of good exchanged for the years ended 31 December 2012 and 31December 2013 Question 11: Part (iii) For the year ended 31" December 2013, Noel Stores made cash sales of electrical appliance for $3,500,000. The cost of goods sold is 80% of sales. The cash sales were subject to a right of return clause by which customers are entitled to a full refund of the sales price if items are returned to Noel Stores within 3 months of purchase. The sales are also subject to a warranty clause by which Noel Stores undertakes to repair any defective items that are returned within a period of 6 months from the date of sale. During the year ended 31" December 2013, Nole Stores made refunds of $130,000 and paid for repair costs of $20,000 for defective electrical appliances. As at 31* December 2013, the right of return privilege for sales amounting to $3,000,000 had expired. The right of return privilege for the balance of sales made during the year ended 31* December 2013 is expected to expire in the following financial year. Noel Stores only accounts for sale when rights of return privilege expire. The accounting year end of the company is 31 December. Required: Prepare general journal entries to account for all transactions for the year ended 314 December 2013. Tutorial Q12 Huntly Development Limited commenced construction of a 3- Storey Shopping Mall in Hamilton on 19 November 2013. It signed a fixed contract for $25 million and the project is to be completed by 319 March 2017. The expected cost of construction was $20 million. The percentage of completion, costs and revenue can be reliably estimated. Financial details of the project for each of the years ending 31" March are as follows: 5 Million 2014 2015 2016 2017 Costs incurred for the year 15 756 Estimated costs to complete 15 s 8 Progress billings for the year 6 175 655 Cash collected during the year 4.5 s BS and Required; (a) Prepare a schedule to show the percentage of completion, revenue, expenses and gross profit for each of the years ending 319 March 2014, 31" March 2015, 31" March 2016 31 March 2017. (b) Prepare general journal entries to record all transactions related to the construction contracts for each of the years ending 31* March 2014, 31" March 2015, 314 March 2016 and 31" March 2017.. (e) Prepare an extract of the Income Statement for the years ending (to show revenue and expenses related to the construction contract) and Balance Sheet as at (to show accounts receivable and contract asset contract liability) 31" March 2014, 31" March 2015, 31" March 2016 and 31 March 2017. Question 11 Part (0) On 1 April 2017 Jusco Limited made credit sales of $1,800,000 to a regular wholesale customer. According to the terms of payment, the credit sales were to be settled in 5 annual instalments of $536,961 per annum. Interest is charged at 15% per annum. The financial year end for Jusco Limited is 31 March Required Prepare journal entries to account for the revenues earned for the year ended 31 March 2018. Assume that Jusco limited uses the net interest method to account for interest revenue Question 11 Part () Texco Limited operates throughout New Zealand and provides a customer loyalty programme in which customers are granted loyalty points when they spend a specified amount on home appliances. These points can then be redeemed to purchase further goods from the company's departmental stores. During the reporting period to 31" December 2012 Texco Limited sold goods worth $15,000,000. The cost of stock sold was $8,000,000. In relation to the sale, Texco Stores Limited awarded 1,500,000 points to its customers. The fair value of cach loyalty point is estimated to be $0.01. When the awards scheme was set up, the management of the company expected 100% of these points to be redeemed. By the 31" December 2012, customers have redeemed 900,000 points in exchange for goods. The cost of the goods exchanged for the loyalty points was $5,000 For the reporting period ending 31" December 2013, the balance of the loyalty points was redeemed. The cost of the goods exchanged for the loyalty points was $3,000. Required: Prepare general journal entries to account for the award of the loyalty points for the year ended 31" December 2012 Prepare general journal entries to account for the redemption of the loyalty points and the cost of good exchanged for the years ended 31 December 2012 and 31" December 2013 Question 11: Part (ii For the year ended 31" December 2013, Noel Stores made cash sales of electrical appliance for $3,500,000. The cost of goods sold is 80% of sales. The cash sales were subject to a right of return clause by which customers are entitled to a full refund of the sales price if items are returned to Noel Stores within 3 months of purchase. The sales are also subject to a For the reporting period ending 31" December 2013, the balance of the loyalty points was redeemed. The cost of the goods exchanged for the loyalty points was $3,000. Required: (a) Prepare general journal entries to account for the award of the loyalty points for the year ended 31 December 2012. (6) Prepare general journal entries to account for the redemption of the loyalty points and the cost of good exchanged for the years ended 31 December 2012 and 31December 2013 Question 11: Part (iii) For the year ended 31" December 2013, Noel Stores made cash sales of electrical appliance for $3,500,000. The cost of goods sold is 80% of sales. The cash sales were subject to a right of return clause by which customers are entitled to a full refund of the sales price if items are returned to Noel Stores within 3 months of purchase. The sales are also subject to a warranty clause by which Noel Stores undertakes to repair any defective items that are returned within a period of 6 months from the date of sale. During the year ended 31" December 2013, Nole Stores made refunds of $130,000 and paid for repair costs of $20,000 for defective electrical appliances. As at 31* December 2013, the right of return privilege for sales amounting to $3,000,000 had expired. The right of return privilege for the balance of sales made during the year ended 31* December 2013 is expected to expire in the following financial year. Noel Stores only accounts for sale when rights of return privilege expire. The accounting year end of the company is 31 December. Required: Prepare general journal entries to account for all transactions for the year ended 314 December 2013. Tutorial Q12 Huntly Development Limited commenced construction of a 3- Storey Shopping Mall in Hamilton on 19 November 2013. It signed a fixed contract for $25 million and the project is to be completed by 319 March 2017. The expected cost of construction was $20 million. The percentage of completion, costs and revenue can be reliably estimated. Financial details of the project for each of the years ending 31" March are as follows: 5 Million 2014 2015 2016 2017 Costs incurred for the year 15 756 Estimated costs to complete 15 s 8 Progress billings for the year 6 175 655 Cash collected during the year 4.5 s BS and Required; (a) Prepare a schedule to show the percentage of completion, revenue, expenses and gross profit for each of the years ending 319 March 2014, 31" March 2015, 31" March 2016 31 March 2017. (b) Prepare general journal entries to record all transactions related to the construction contracts for each of the years ending 31* March 2014, 31" March 2015, 314 March 2016 and 31" March 2017.. (e) Prepare an extract of the Income Statement for the years ending (to show revenue and expenses related to the construction contract) and Balance Sheet as at (to show accounts receivable and contract asset contract liability) 31" March 2014, 31" March 2015, 31" March 2016 and 31 March 2017