Question

Brief Exercise 18-02 On May 10, 2020, Cosmo Co. enters into a contract to deliver a product to Greig Inc. on June 15, 2020. Greig agrees to pay the full contract price of $2,000 on July 15, 2020. The cost of the goods is $1,300. Cosmo delivers the product to Greig on June 15, 2020, and receives payment on July 15, 2020. Prepare the journal entries for Cosmo related to this contract. Either party may terminate the contract without compensation until one of the parties performs. (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 o for the amounts.) Date Account Titles and Explanation Debit Credit (To record contract entered into) (To record sales) (To record cost of goods sold) (To record payment received)

Answer 1

Answer:

Journal

Date	Particular	Debit	Credit
May 10, 2020	No Entry (Note 1)	$0
			$0
	(To record contact entered into)
June 15, 2020	Account Receivable A/c Dr.	$2000
	To Sales Revenue A/c		$2000
	(To record Sales)
June 15, 2020	Cost of goods sold A/c. Dr.	$1300
	To Inventory A/c		$1300
	(To record cost of goods sold)
July 15, 2020	Cash A/c Dr.	$2000
	To Account Receivable A/c		$2000
	(To record payment received)

Notes:

1. On May 10, 2020 there is No Entry as party has not performed under the contract and either party may terminate the contract without compensatory damages.