Question

On January 1, 2020, Novak Co. enters into a contract to sell a customer a wiring base and shelving unit that sits on the base in exchange for $2,800. The contract requires delivery of the base first but states that payment for the base will not be made until the shelving unit is delivered. Novak identifies two performance obligations and allocates $1,120 of the transaction price to the wiring base and the remainder to the shelving unit. The cost of the wiring base is $740; the shelves have a cost of $340. Prepare the journal entry on January 1, 2020, for Novak. (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.) Account Titles and Explanation Debit Credit Prepare the journal entry on February 5, 2020, for Novak when the wiring base is delivered to the customer. (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.) Account Titles and Explanation Debit Credit (To record sales) (To record cost of goods sold)

Answer 1

Answer:

Date	Particulars	Debit ($)	Credit ($)
1-Jan-2020	No enry required
5-Feb-2020	Contract asset	1120	`
	Sales revenue		1120
	(To record sales revenue)
5-Feb-2020	Cost of goods sold	740
	Inventory		740
	(To record cost of goods sold)
25-Feb-2020	Cash`	2800
	Contract asset		1120
	Sales revenue (2800-1120)		1680
	(To record sales)
25-Feb-2020	Cost of goods sold	340
	Inventory		340
	(To record cost of goods sold)