Question

On May 1, 2020, Teal 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 $990 in advance on May 15, 2020. Kickapoo pays Teal on May 15, 2020, and Teal delivers the mower (with cost of $648) on May 31, 2020.

(a) Prepare the journal entry on May 1, 2020, for Teal.
(b) Prepare the journal entry on May 15, 2020, for Teal.
(c) Prepare the journal entry on May 31, 2020, for Teal.

Answer 1

A. May 1, 2020

No entry

B. May 15, 2020

Dr Cash $990

Cr Unearned revenue $990

C. May 31, 2020

Dr Unearned revenue $990

Cr sales $990

Dr cost of goods sold $648

Cr Inventory $648

Step-by-step explanation:

(a) Preparation or the journal entry on May 1, 2020, for Teal.

May 1, 2020

No entry

(b) Preparation of the journal entry on May 15, 2020, for Teal.

May 15, 2020

Dr Cash $990

Cr Unearned revenue $990

(To record Advance received)

(c) Preparation of the journal entry on May 31, 2020, for Teal.

May 31, 2020

Dr Unearned revenue $990

Cr sales $990

(To record sales)

Dr cost of goods sold $648

Cr Inventory $648

(To record cost of goods sold)