Reference no: EM131572518

Problem -

Swifty Company is presently testing a number of new agricultural seeds that it has recently harvested. To stimulate interest, it has decided to grant to five of its largest customers the unconditional right of return to these products if not fully satisfied. The right of return extends for 4 months. Swifty estimates returns of 20%. Swifty sells these seeds on account for $1,620,000 (cost $891,000) on January 2, 2017. Customers are required to pay the full amount due by March 15, 2017.

Prepare the journal entry for Swifty at January 2, 2017. (Credit account titles are automatically indented when 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.)

Assume that one customer returns the seeds on March 1, 2017, due to unsatisfactory performance. Prepare the journal entry to record this transaction, assuming this customer purchased $99,000 of seeds from Swifty. (Credit account titles are automatically indented when 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.)

Assume Swifty prepares financial statements quarterly. Prepare the necessary entries (if any) to adjust Swifty's financial results for the above transactions on March 31, 2017, assuming remaining expected returns of $225,000. (Credit account titles are automatically indented when 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.)