Pharoah Company sells goods that cost $295,000 to Ricard Company for $446,000 on January 2, 2017. The sales price includes an installation fee, which has a standalone selling price of $42,000. The standalone selling price of the goods is $404,000. The installation is considered a separate performance obligation and is expected to take 6 months to complete.
(a) Prepare the journal entry (if any) to record the sale on January 2, 2017. (Credit account titles are automatically indented when 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 | Debit | Credit |
Jan 2, 2017 | Accounts Receivable | 446000 | |
Sales Revenue | 404000 | ||
Unearned Service Revenue | 42000 | ||
Jan 2, 2017 | Cost of Goods Sold | 295000 | |
???? | 295000 |
(b) Pharoah prepares an income statement for
the first quarter of 2017, ending on March 31, 2017 (installation
was completed on June 18, 2017). How much revenue should Pharoah
recognize related to its sale to Ricard?
First | Quarter |
Sales Revenue | 404,000 |
Cost of Goods Sold | ???? |
Gross Profit | ???? |
List of Accounts:
Accounts Receivable
Accounts Payable
Advertising Expense
Allowance for Sales Returns and Allowances
Billings on Construction in Process
Cash
Cash, Parts, Labor
Commission Expense
Commission Revenue
Construction in Process
Construction Expenses
Contract Asset
Contract Liability
Cost of Goods Sold
Cost of Installment Sales
Deferred Gross Profit
Delivery Expense
Discount on Notes Receivable
Estimated Inventory Returns
Finished Goods Inventory
Franchise Revenue
Freight- Out
Gain on Repossession
Income Summary
Installment Accounts Receivable
Installment Sales Revenue
Interest Expense
Interest Revenue
Inventory
Inventory on Consignment
Liability to Bonus Point Customers
Liability to Enyart Company
Liability to Werner Metal Company
License Revenue
Loss from Long-Term Contracts
Loss on Repossession
Materials, Cash, Payables
No Entry
Notes Receivable
Operating Expenses
Payable to Consignor
Purchases
Realized Gross Profit
Repossessed Merchandise
Retained Earnings
Returned Inventory
Revenue from Consignment Sales
Revenue from Franchise Fees
Revenue from Long-Term Contracts
Sales Discounts
Sales Discounts Forfeited
Sales Returns and Allowances
Sales Revenue
Service Revenue
Unearned Franchise Revenue
Unearned Sales Revenue
Unearned Service Revenue
Unearned Warranty Revenue
Warranty Expense
Warranty Liability
Answer
Requirement A
Date | Account titles and Explanation | Debit ($) | Credit ($) |
Jan 2, 2017 | Accounts receivable | $4,46,000 | |
Unearned revenue | $42,000 | ||
Sales revenue | $4,04,000 | ||
To record sale | |||
Jan 2, 2017 | Cost of goods sold | $2,95,000 | |
Merchandise inventory | $2,95,000 |
Requirement B
Quarter 1 | |
Particulars | Amount ($) |
Sales revenue | $4,04,000 |
Less: Cost of goods sold | $2,95,000 |
Gross profit |
$1,09,00 |
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