Sunland Treasures Company sells home furnishings. On February 1, Sunland Treasures entered into a contract with Simon Development Ltd. for home furnishings with a selling price of $40,000 and terms of 30. The goods coat Sunland $24,000. Sunland Treasures has a stated return policy of 20 days from the date of sale and based on past transactions, management determines that returns are 5% of sales 65% of the time and 10% of sales 35% of the time. The goods were delivered to Simon Development an February 15. Sunland Treasures uses the expected value method to estimate returns and the contract-based approach for revenue recognition

Transaction Price is = 37,300

Prepare the journal entries to recognize revenue on the appropriate date. (Hint. The expected value method is also used to determine the amount for cost of goods sold and estimated inventory returns)

1.RECORD COST OF GOODS SOLD

ACCOUNT TITLES	DEBIT	CREDIT
Cost of goods sold
Estimated inventory returns
Merchandise inventory