| 1) On January 1, 2017, Skysong sells 30 augers to Mills Farm & Fleet for $33,000. Mills signs a 6-month note at an annual interest rate of 12%. Skysong allows Mills to return any auger that it cannot use within 60 days and receive a full refund. Based on prior experience, Skysong estimates that 5% of units sold to customers like Mills will be returned (using the most likely outcome approach). Skysongs 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 Skysong on January 1, 2017. 2) On August 10, 2017, Skysong sells 17 mini-trenchers to a farm co-op in western Minnesota. Skysong provides a 4% volume discount on the mini-trenchers if the co-op has a 15% increase in purchases from Skysong compared to 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 entry for Skysong on August 10, 2017. 3) Skysong sells three grain/hay dryers to a local farmer at a total contract price of $49,500. In addition to the dryers, Skysong provides installation, which has a standalone selling price of $1,100 per unit installed. The contract payment also includes a $1,100 maintenance plan for the dryers for 3 years after installation. Skysong signs the contract on June 20, 2017, and receives a 20% down payment from the farmer. The dryers are delivered and installed on October 1, 2017, and full payment is made to Skysong. Prepare the journal entries for Skysong in 2017 related to this arrangement. 4) On April 25, 2017, Skysong ships 110 augers to Concord Depot, a farm supply dealer in Nebraska, on consignment. By June 30, 2017, Concord Depot has sold 60 of the consigned augers at the listed price of $1,100 per unit. Concord Depot notifies Skysong of the sales, retains a 10% commission, and remits the cash due Skysong. Prepare the journal entries for Skysong and Concord Depot for the consignment arrangement. |
