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Prepare journal entries that fabulous athletics will need

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Reference no: EM132677656

Fabulous Athletics offers a monthly subscription box for $40 where
a new pair of leggings is automatically sent to subscribers on the first day of the month. If a customer does not like their leggings, they can send the leggings back before the last day of the month free of charge in exchange for a store credit. Historically, 30% of customers send back their leggings each month. A member's credit card is automatically billed on the first day of the month; if there are any concerns regarding the credit card, the subscription box is not shipped, and the member's account is put on hold. Shipping terms are f.o.b. shipping point. During the month of September 2020, the company had 5,000 members. The cost of each subscription box to Fabulous Athletics is $15. The company reports under ASPE.

Required:

Problem a) Prepare the journal entries that Fabulous Athletics will need to record in September 2020 for both the sale of subscription boxes and the related cost of goods sold.

Problem b) Would your answer in Part A be different if the company used IFRS? Show how the journal entries would be different, if applicable.

Reference no: EM132677656

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