Pete's Paint Stores began 2019 with a credit balance of $32,000 in its refund liability account. Credit sales and cash collections from customers during the year were $650,000 and $610,000, respectively. Pete's Paint Stores estimates that 3% of all sales will be returned. During 2019, customers returned merchandise for credit of $14,000 to their accounts.

What is the balance in the refund liability account at the end of 2019?

		$36,300.
		$43,000.
		$37,500.
		$19,500.

Fake Toy Company sold $46,000 of pipe to the Toy Store on December 12 of the current year with terms 1/15, n/60. Fake Toy uses the gross method of accounting for sales discounts. The Toy Store pays the invoice in full on December 26. What entry will Fake Toy make on receipt of payment?

Cash	46,000
Sales discounts	460
Accounts receivable		46,000
Sales discounts forfeited		460

Cash	45,540
Sales	460
Accounts receivable		46,000

Cash	46,000
Accounts receivable		45,540
Sales		460

Cash	45,540
Sales discounts	460
Accounts receivable		46,000

On November 10 of the current year, Cherokee Industries sold materials to Cheyenne Inc. for $800,000 with credit terms 2/10, n/30. Cherokee uses the net method of accounting for sales discounts. Cheyenne paid the invoice in full on November 17. What entry will Cherokee make on receipt of payment?

Cash	784,000
Accounts receivable		784,000

Cash	784,000
Sales discounts	16,000
Accounts receivable		800,000

Cash	784,000
Sales	16,000
Accounts receivable		800,000

Cash	800,000
Sales discounts	16,000
Accounts receivable		800,000
Sales		16,000

The core revenue principle states that:

		Companies recognize revenue when the invoice is sent to the customer.
		Companies recognize revenue when goods or services are transferred to customers for the amount the company expects to be entitled to receive in exchange for those goods or services.
		Companies recognize revenue when the earnings process is virtually complete and it is probable that payments will be received.
		Companies recognize revenue when goods or services are transferred to the customer and payments are received.

Chao paid $3,600 for a 6-month language course on August 1st with ESL Corp. As of October 1st, ESL's accounting records would indicate:

		$3,600 of revenue, $3,600 of cash
		$1,200 of revenue, $2,400 of deferred revenue, $3,600 of cash
		$2,400 of revenue, $1,200 of accounts receivable, $3,600 of cash
		$1,200 of revenue, $1,200 of accounts receivable

On January 1, 2019, Joe's Development company purchased a 10-acre parcel of land from Lew's farm with the intent to build an apartment complex. Joe and Lew agreed that Joe will pay for the land after the construction is completed, which is scheduled for December 31, 2022. At that time, Joe will pay Lew $1,000,000. What accounts will Lew debit or credit for this transaction in 2019?

		Land sales revenue and Notes receivable
		Land sales revenue, Notes receivable, Discount on notes receivable, Interest revenue
		Land sales revenue, Notes receivable, Discount on notes receivable
		None of the above.

Chen Inc. accepted a two-year noninterest-bearing note for $605,000 on January 1, 2021 in exchnage for the sale of an automated die cast machine. The effective interest rate is 10%.

What is the correct entry to record the note?

Notes receivable	605,000
Interest revenue		105,000
Cost of sales		500,000

Notes receivable	500,000
Accounts receivable		500,000

Notes receivable	605,000
Sales Revenue		605,000

Notes receivable	605,000
Discount on notes receivable		105,000
Sales revenue		500,000

Boomerang Computer Company sells computers with an unconditional right to return the computer if the customer is not satisfied. Boomerang has a long history selling these computers under this returns policy and can provide precise estimates of the amount of returns associated with each sale. For a computer priced at $1,000 and a 5% expected return rate, Boomerang should recognize net sales revenue of:

		$1,000 when the computer is delivered to the customer.
		$1,000 when the customer pays Boomerang for the computer.
		$950 when Boomerang delivers the computer to the customer.
		$950 wWhen Boomerang receives payment from the customer.