Professional Documents
Culture Documents
1. The company spent $ 649.9 mil on purchases of land, building and equipment during the year.
Journal entry: $ mm $ mm
Cash 649.9
2. The company paid $ 906.9 mil to retire long-term debt during the year.
Journal entry: $ mm $ mm
Cash 906.9
1. Receipt of Guest cruise deposits before completion of voyages, being unearned revenue,
caused Carnival to incur this liability. It is an external event.
2. Assets (cash) on the left hand side and total liabilities (Liabilities) on the right hand side will
increase by $2,805 million.
3. Journal entry to record a future deposit of $1,000:
Cash 1000
1.Revenue recognition differs in the three types of sales because of the accrual/non-accrual
of deferred revenue or a liability, ie, the time of cash receipt varies.
• At point of sale, the transaction is instantly finalized and cash receipt is immediate.
• For the other 3 types, sale is considered complete when the products are shipped or
delivered to customers. So, revenue is deferred till receipt of products by customers.
2.Revenue associated with gift cards is recognized when the gift card is redeemed by the
customer.
Journal entry by Nordstrom at the time of selling a card :
Cash Dr
Gift Cards Cr
Gift Cards Dr
Revenue from Gift Cards Cr
DC 5-3
1. Gap uses weighted average inventory costing method. This is because this method
reflects the net income for the period accurately for Gap, while being the easiest
method of inventory valuation.
2. Gap defines Market as the replacement cost of inventory. Factors to be taken into
account when deciding whether to write down inventory :
•Use over time/obsolescence
• Prevailing market value (if lower than recorded inventory cost) .