Question
On February 1, 2020, Concord Ltd. began selling electric scooters that it purchased exclusively from Ionone Motors Inc. Ionone Motors offers volume rebates based on
On February 1, 2020, Concord Ltd. began selling electric scooters that it purchased exclusively from Ionone Motors Inc. Ionone Motors offers volume rebates based on the volume of annual sales to its customers and calculates and pays the rebates at its fiscal year end, December 31. Concord has a September fiscal year end and uses a perpetual inventory system. The rebate offer that Concord received is for a $75 rebate on each scooter that is purchased in excess of 150 units in the calendar year, ending December 31. An additional rebate of $30 is given for all units purchased in excess of 175 units in the same year. By September 30, 2020, Concord had purchased 170 units from Ionone Motors and had sold all but 35. Although it only made its first purchase on February 1, 2020, Concord expects to purchase a total of 205 electric scooters from Ionone Motors by December 31, 2020. Before arriving at the estimate of 205 electric scooters, Concords management looked carefully at trends in purchases by its competitors and the strong market for sales of electric scooters in the coming months; sales are especially strong among environmentally conscious customers in suburban areas. Management is very confident the 205 electric scooters will be purchased by December 31, 2020. Assuming that Concord follows the reporting requirements under ASPE, answer the following questions.
Calculate the amount of any accrued rebate to be recorded by Concord at September 30, 2020, assuming that the rebate is not discretionary and that management has a high degree of confidence in its estimate of the amount of purchases that will occur by December 31, 2020. (Round per unit rate to 2 decimal places, e.g. 1.25 and final answer to 0 decimal places, e.g. 5,275.)
Accrued rebate $ |
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Assistance Used
List of Accounts
Record the accruals that are needed at Concords fiscal year end of September 30, 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 0 for the amounts. Round answers to 0 decimal places, e.g. 5,125.)
Date | Account Titles and Explanation | Debit | Credit |
Sep. 30, 2020 | |||
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List of Accounts
How would your response change if Concord followed the reporting requirements of IFRS?
The response changesremains unchanged under the reporting requirements of IFRS. |
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