Monty 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 Monty's products. Pricing and cost information on three of Monty's most popular products are as follows. Standalone Item Selling Price (Cost) Mini-trencher Power fence hole auger Grain/hay dryer $3,400 ($1,800 ) 1,300 (800) 14,700 (10,900 ) Respond to the requirements related to the following independent revenue arrangements for Monty Ranch & Farm. Your answer is incorrect. On January 1, 2020, Monty sells 40 augers to Mills Farm & Fleet for $52,000. Mills signs a 6-month note at an annual interest rate of 12%. Monty allows Mills to return any auger that it cannot use within 60 days and receive a full refund. Based on prior experience, Monty estimates that 5% of units sold to customers like Mills will be returned (using the most likely outcome approach). Monty'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 Monty 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 (To record sales) (To record cost of goods sold) Debit Credit (b) On August 10, 2020, Monty sells 17 mini-trenchers to a farm co-op in western Minnesota on account. Monty provides a 4% volume discount on the mini-trenchers if the co-op has a 15% increase in purchases from Monty 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 Monty 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 Debit Credit (To record sales)