Question

Cullumber Company sells goods that cost $293,000 to Ricard Company for $381,000 on January 2, 2017. The sales price includes an installation fee, which has a standalone selling price of $39,000. The standalone selling price of the goods is $342,000. The installation is considered a separate performance obligation and is expected to take 6 months to complete. Prepare the journal entry (if any) to record the sale on January 2, 2017.

Answer 1

The Journal entry are as follows:

(i) On January 2, 2017

Accounts receivable A/c Dr. $381,000

To Sales revenue $342,000

To unearned service revenue $39,000

(To record the sale of goods)

(ii) On January 2, 2017

Cost of goods sold A/c Dr. $293,000

To Inventory A/c $293,000

(To record the cost of goods sold)