Technical accounting memo

An accounting position researched in the Codification and peers' filings, written issue to conclusion with journal entries and note wording. Every figure tied to the ledger

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DOCXXLSX15 steps

The problem

LCI Industries expects $119.3 million in tariff refunds and owes customers $88.8 million

Book a tariff refund as one credit to other income and the quarter is wrong three ways. Duty on goods still on hand reduces inventory, refunds owed to customers who paid a surcharge come off revenue, and interest is separate. LCI Industries put $104.8 million of its $119.3 million against cost of sales and $14.5 million against inventory, and took the $88.8 million owed to customers off net sales

The request

Write the technical accounting memo on Lantern's IEEPA tariff refunds for the Q3 10-Q and the auditors' review. We import outdoor power equipment, $780 million revenue, calendar year. We capitalized duties into inventory and billed retailers a surcharge from April 2025. CBP certified part of our refund in August and paid some by September 30; as a CIT plaintiff, our finally liquidated entries go in through Phase 3 from October 6. Split each entry's duty between goods sold and on hand, add interest, and roll it to September 30. Test our June policy election against peers' June 10-Qs. Issue to conclusion, with journal entries, note and MD&A wording. Watch the contracts that pass refunds back. Ledgers, notices and contracts attached.

Lantern duty ledger by entry Feb25 to Feb26.xlsx
Lantern CAPE declarations and CBP notices.pdf
Lantern inventory layers Sep26.xlsx
Lantern surcharge invoices Apr25 to Feb26.xlsx
Lantern retail customer contracts.pdf
Lantern Q2 tariff refund memo.docx
Lantern trial balance Sep26.xlsx

How Axe works

ApprovedChanges asked

Your reviewApprove, or say what to change

Approved or changes

Memo and refund scheduleMemo, schedule and tie out report

Final reviewApprove the revised files

Revised memo and refund scheduleRevised files and tie out

Step

Split the refund by entry

Prompt

Sent to the model at this step

Build the refund schedule from the reconciled duties, one row per entry: entry number and date, IEEPA duty, status at September 30, amounts certified and paid with their dates, and interest, taken from the CBP notice where paid and computed at the overpayment rate for corporations in CBP's quarterly interest notices, for each quarter from the date of deposit to September 30 where not. Trace each entry's duty into the inventory layers it costed and split it by units: sold by June 30, sold in the third quarter, and on hand at September 30. Apply the concluded policy to every row: the amount recognized against cost of sales for units sold, the amount recognized against inventory for units on hand, and the amount not yet recognized, with the reason. On a customer tab, compute from its surcharge invoices and its contract clause the surcharge we expect to pass back to each retail customer, whether or not its trigger has occurred, including customers whose contracts are silent but whom we expect to refund, and the refund liability and reduction of net sales. Never net what customers are owed against the receivable from CBP; they are different counterparties. Show the third quarter and year to date effect on net sales, cost of sales, gross margin, interest income and tax, and the rollforward from June 30 to September 30 of the refund receivable, the inventory reduction, the customer liability and accrued interest, each tied to the trial balance. Write the journal entries for the quarter. Close with a check that duty recognized and not recognized adds back to the reconciled IEEPA duty, entry by entry and in total.

Uses

Inventory layers
Surcharge invoices
Customer contracts
Trial balance
Prior memo
Fact pattern
Reconciled duties
Analysis

Produces

Refund schedule

What you get back

DOCXTechnical accounting memoIssue, background, guidance, analysis, alternatives considered, conclusion, journal entries, note and MD&A wording

XLSXRefund scheduleDuty by entry, sold and on hand, customer liabilities, interest and September 30 rollforwards

Tie out reportOpen items first, then each figure and citation marked tied or corrected

Make it yours

Point it at another transaction or standard, use your memo template and policy manual, or change the peers you benchmark. Every step and every prompt can be edited

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