Question

On May 1, 2017, Tamarisk Inc. entered into a contract to deliver one of its specialty mowers to Kickapoo Landscaping Co. The contract requires Kickapoo to pay the contract price of $930 in advance on May 15, 2017. Kickapoo pays Tamarisk on May 15, 2017, and Tamarisk delivers the mower (with cost of $632) on May 31, 2017. (a) Prepare the journal entry on May 1, 2017, for Tamarisk. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit May 1, 2017

Answer 1

For May 1st none entry will be required.

Step-by-step explanation:

For May 1st none entry will be required. The revenue should use conservatism. Tamarisk should wait until the cash proceeds or the delivery of the mowers.

For May 15th it will do:

cash 930

unearned revenue 930

because it receive the cash, but the merchandise is not deliver yet, so it will have the obligation to do so.

For may 31th

unearned revenue 930

sales revenue 930

COGS 632

inventory 632

to recognize the earned revenue from the mowers

and the COGS