Question

On May 1, 2017, Cullumber Company enters into a contract to transfer a product to Eric Company on September 30, 2017. It is agreed that Eric will pay the full price of $24,130 in advance on June 15, 2017. Eric pays on June 15, 2017, and Cullumber delivers the product on September 30, 2017. Prepare the journal entries required for Cullumber in 2017.

Answer 1

Solution :

Journal Entries required for Cullumber in 2017

Sl.No.	Date	Journal Entry	Dr Amount	Cr Amount
1	June 15th, 2017	Cash   a/c                                Dr                To Unearned sales Revenue a/c	$ 24,130	$ 24,130
2	September 30th, 2017	Unearned sales Revenue   a/c         Dr                To Sales Revenue a/c	$ 24,130	$ 24,130

Note :

No entry is required to be made on May 1st 2017, when the contract is entered into , as no transfer of resources either in the form of cash or goods or services has taken place.