Question 5 Buffalo Ranch & Farm is a distributor of ranch and farm equipment. Its products include small tools, power equipment for trench-digging and fencing, grain dryers, and barn winches. Most products are sold direct via its company Internet site. However, given some of its specialty products, select farm implement stores carry Buffalo's products. Pricing and cost information on three of Buffalo's most popular products are as follows. Stand-Alone Selling Price (Cost) Item $2,800 ($1,560) Mini-trencher Power fence hole auger 936 ($624) Grain/hay dryer ($8,580) 11,040 Respond to the requirements related to the following independent revenue arrangements for Buffalo Ranch & Farm. IFRS is a constraint. Your answer is correct. On January 1, 2020, Buffalo sells augers to Mills Farm & Fleet for $37,440. Mills signs a six-month note at an annual interest rate of 12%. Buffalo allows Mills to return any auger that it cannot use within 60 days and receive a full refund. Based on prior experience, Buffalo estimates that 5% of units sold to customers like Mills will be returned (using the most likely outcome approach). Buffalo's costs to recover the products will be immaterial, and the returned augers are expected to be resold at a profit. Prepare the journal entries for Buffalo 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 Credit Date Debit January 1, 2020TNotes Receivable 37,440 Refund Liability 1,872 Sales Revenue 35,568 (To record sale on account) January 1, 2020TCost of Goods Sold 23,712 Estimated Inventory Retur 1,248 Inventory 24,960 (To record cost of goods sold) Your answer is correct. On August 10, 2020, Buffalo sells 18 mini-trenchers to a farm co-op in western Canada. Buffalo provides a 4% volume discount on the mini-trenchers if the co-op has a 15% increase in purchases from Buffalo compared with the prior year. Given the slowdown in the farm economy, sales to the co-op have been flat, and it is highly uncertain that the benchmark will be met. Prepare the journal entries for Buffalo 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.) Date Debit Credit Account Titles and Explanation August 10, 2020 TCash 50,400 Sales Revenue 50,400 (To record cash sale) August 10, 2020TCost of Goods Sold 28,080 Inventory 28,080 (To record cost of goods sold) Your answer is partially correct. Try again Buffalo sells three grain/hay dryers to a local farmer at a total contract price of $35,000. In addition to the dryers, Buffalo provides installation, which has a stand-alone sales value of $600 per unit installed. The contract payment also includes a $1,080 maintenance plan for the dryers for three years after installation. Buffalo 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 Buffalo. Prepare the journal entries for Buffalo in 2020 related to this arrangement as well as any adjusting journal entries at its December year end. (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. Record journal entries in the order presented in the problem. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Credit Debit June 20, 2020 Cash 7,000 Contract Asset/Liability 7,000 October 1, 2020 Cash 28,000 Contract Asset/Lia bility 7,000 Sales Revenue 35,000 Construction Expenses 1,800 Miscellaneous Expense 90 (To record sales and installation revenue) Cost of Goods Sold October 1, 2020 25,740 25,740 Inventory (To record cost of goods sold) December 31, 2020 Warranty Revenue 270 Warranty Liability 370 answer is partlally correct. Try again. On April 25, 2020, Buffalo ships 90 augers to Farm Depot, a farm supply dealer in Alberta, on consignment. By June 30, 2020, Farm Depot has sold 70 of the consigned augers at the listed price of $936 per unit. Farm Depot notifies Buffalo of the sales, retains a 10% commission, and remits the cash due to Buffalo. Prepare the journal entries for Buffalo 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 0 for the amounts. Record journal entries in the order presented in the problem.) Debit Credit Date Account Titles and Explanation Entries for Buffalo - the Consignor April 25, 2020 TInventory on Consignment 56,160 56,160 Inventory June 30, 2020 Commission Expense 6,552 Sales Revenue 58,968 Revenue from Consignr 65,520 (To record revenue from consignment sales) Cost of Goods Sold June 30, 2020 43,680 Inventory on Consignm 43,680 (To record cost of gods sold) Entries for Farm Depot the Consignee Inventory April 25, 2020 56,160 Inventory on Consignm 56,160 Commission Revenue June 30, 2020 6,552 Revenue from Consignmer 58,968 Consignment Sales 65,520 (To record revenue from consignment sales) Accounts Payable June 30, 2020 58,968 Cash 58,968 (To record payment on account)