Bass hunt is a local outdoor store that competes with otheroutdoor stores.
They are proposing two marketing plans follow (considerthem independent of each other)
Plan 1: They sell a deer tree stand. they take a standard treeand modify it to make it work.
- They sold 80 stands during 2018 for $400 each
- the stands are warrantied for 3 years (manufacturedefects)
- the company's purchase cost per stand is $250 and they spentanother $3,000 modifying the 80 stands.
- in addition to the sale of the stand, they sold extendedwarranties for 20 stands that added 2 years to the period.
- the extended warranty was sold for $250 each
- the company estimates that they will incur $2,600 of totalcost servicing the 3 year standard warranty for the 80 stands soldduring 2018.
Plan 2: they have a customer royalty program that \"rewards\"customer with one point for every $10 purchase.
- each point is redeemable for $1.00 off any purchase from thestore in the next two years.
- during 2018, customers bought $100,000 of products and earned10,000 points.
- the standalone selling price of the products was $100,000
- based on previous data, they expect 9,400 of the points to beredeemed from the 10,000
Required:
A- prepare journal entries for the 2018 sale of tree stands andwarranty.
B- The company incurred $350 of warranty cost during 2018relating with 2018 sales. prepare journal entry to record theincurrence of these costs and prepare any 12/31/18 adjustingentries.
C- prepare journal entries related to bonus point sales for2018.
D- How much will the company recognize additional revenue in2019 assuming 4,600 of the 2018 points are redeemed.
