IFRS 15 11. Scenario 1. Historically, about 8% of all the merchandise Asiago, Inc. sells is returned. On January 4, Asiago sold merchandise costing $40,000 to a customer for $62,000 on account. On January 17, Asiago refunded $3,200 for the return of some of the merchandise. On January 28, Asiago sold merchandise costing $12,000 for $15,000 on account. Assume the company uses a perpetual inventory system and all accounts are unpaid at the time of returns.
Scenario 2. Ray’s Sporting Goods, Inc. shipped aluminum baseball bats on consignment to Martin Stores on April 6, 2019. The total cost of the bats is $31,000 with a retail value of $50,000. Martin agrees to accept the consigned merchandise and is eligible to receive a 15% commission on all sales. Martin sells the entire shipment to Anoi College and received cash on May 28, 2019, and notifies Ray’s Sporting Goods immediately.
Scenario 3. ATickets. com sells discount airline tickets online. The company orders the tickets after a customer makes a purchase request. Atickets. com earns a flat fee of 25% of the total ticket price. The company sold $1,000,000 in airline tickets during the current year and had collected $800,500 as of the end of the year. ATickets. com is an agent in this transaction and thus uses the net revenue reporting method of accounting for sales.
Required:
1. Prepare the journal entries to record the sales, estimated returns, and the actual return in the scenario 1.
2. Prepare the journal entries to record the consignment sale transactions on both Ray’s and Martin’s books.
3. Record the sales transactions, the cash collections for the current year and the amount remitted to the airlines.