What's the entry for this...?

Question

For example,

Aprl 1 Major Cash Purchases 150, 000 units of CDs @ $96 unit cost plus $50, 000 for freight charges and $20, 000 for handling cost (Handling cost will be immediately debited to purchases.

Apr 10 Cash Sales, 5, 000 units @ $ 300 average selling price.

Apr 11 Paid in delivery expenses and handling charges: 2% of related sales.

Apr 30 Launch massive advertising campaign $ 1, 000,000 to increase sales

May 10 Paid $ 2, 000, 000 to Pani Recording Studios due to lost from law suit due to Copyright Infringement

May 15 Reacquire 50, 000 ordinary shares from shareholders at current market value of shares. Due to some financial difficulties and management problems the market value of shares decreased to $ 101.

Answer 1

Aprl 1 Major Cash Purchases 150, 000 units of CDs @ $96 unit cost plus $50, 000 for freight charges and $20, 000 for handling cost (Handling cost will be immediately debited to purchases)
Dr Purchases 14,420,000
Dr Inward freight 50,000
Cr Cash 14,470,000
(being purchases and freight incurred)

Apr 10 Cash Sales, 5, 000 units @ $ 300 average selling price.
Dr Cash 1,500,000
Cr Sales 1,500,000
(being cash sales)

Apr 11 Paid in delivery expenses and handling charges: 2% of related sales
Dr Delivery expenses 30,000
Cr Cash 30,000
(being 2% delivery expenses)

Apr 30 Launch massive advertising campaign $ 1, 000,000 to increase sales
Dr Advertising expenses 1,000,000
Cr Cash or A/cs payable 1,000,000
(being advertising expenses)

May 10 Paid $ 2, 000, 000 to Pani Recording Studios due to lost from law suit due to Copyright Infringement
Dr Loss from lawsuit 2,000,000
Cr Cash 2,000,000
(being amt paid to Pani Recording Studios)

May 15 Reacquire 50, 000 ordinary shares from shareholders at current market value of shares. Due to some financial difficulties and management problems the market value of shares decreased to $ 101.
Dr Treasury stock 5,050,000
Cr Cash 5,050,000
(being repurchase of co's own shares)

Note : The Company is required to consider whether the advertising expenses qualify to be treated as capitalizable direct response advertising under the Statement of
Position 93-7 - "Reporting on Advertising Costs" ("SOP 93-7") issued by American Institute of Certified Public Accountants ("AICPA"). If the criteria specified for capitalizing the direct response advertising in this accounting
pronouncement are met, then the Company should capitalize such advertising expenses and amortize them over the expected benefit periods.

Answer 2

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