Question

Exercise 18-03 On May 1, 2020, Richardson 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 $900 in advance on May 15, 2020. Kickapoo pays Richardson on May 15, 2020, and Richardson delivers the mower (with cast of $575) on May 31, 2020. (a) Prepare the journal entry on May 1, 2020, for Richardson. (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 tities and enter o for the amounts.) Debit Credit Date Account Titles and Explanation May 1, 2020 (b) Prepare the journal entry on May 15, 2020, for Richardson. (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 Date May 15, 2020 (c) Prepare the journal entry on May 31, 2020, for Richardson. (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 tities and enter o for the amounts.) Debit Credit Date Account Titles and Explanation May 31, 2020 (To record sales)

Answer 1

a) Mere entering a contract does not require a journal entry .

b) Cash a/c Dr. $ 900

To Customer Advances Cr. $ 900

(Being advance received and booked in the books of Richardson Inc)

c) Customer Advances Dr. $ 575

To Sales Cr. $575

(Being advanced nullified and sales booked towards kickapoo landspacing co.)