Ask Question
24 June, 07:57

Shaw Company sells goods that cost $300,000 to Ricard Company for $410,000 on January 2, 2020. The sales price includes an installation fee, which has a standalone selling price of $40,000. The standalone selling price of the goods is $370,000. The installation is considered a separate performance obligation and is expected to take 6 months to complete. (a) Prepare the journal entries (if any) to record the sale on January 2, 2020.

+4
Answers (1)
  1. 24 June, 09:39
    0
    January 2, 2020

    Dr Accounts receivable 410,000

    Cr Sales revenue 370,000

    Cr Unearned revenue 40,000

    Dr Cost of goods sold 300,000

    Cr Merchandise inventory 300,000

    Accrual accounting states that revenues must be recognized during the periods that they actually occur (i. e. the earning process is completed). Since the installation process lasts 6 months, the unearned revenue will be recognized as the process is being completed.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Shaw Company sells goods that cost $300,000 to Ricard Company for $410,000 on January 2, 2020. The sales price includes an installation ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers