| a) | North Co. offers rebates of 2% to South Co. if South purchases at least 40,000 units in a year. In the first quarter of the year, North sells 15,000 units to South at a sales price of $220,000, and records revenue in this amount. In prior years, North sold over 40,000 units to South. |
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| b) | On January 12, 2020, TCT Inc. shipped merchandise with a retail value of $25,000 on consignment to Avian Store. TCT recorded sales revenue of $25,000 with COGS of $18,000 on January 12 for the transaction. |
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| c) | Construction Ltd. enters into a contract with a customer to build an office building for $2,000,000, with a performance bonus of $200,000 if the building is ready by July 1, 2021. The contract requirements are similar to contracts that Construction has performed previously, and management estimates that there is a 70% probability that the contract will be completed by July 1, 2021. Given the uncertainty, management didn’t include the bonus in the total transaction price. |
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| d) | Lang Co. sold 100 units to Trung Co. on account for a selling price of $14,500. Lang grants the right to return products that do not sell in the four months following delivery. Past experience indicates that the normal return rate is 12%. When Trung returned five products, Lang recorded a debit to refund liability for $725. |
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