Kingbird Company sells on credits goods that cost $295,500 to Ricard Company for $418,000 on January...
Kingbird Company sells on credits goods that cost $295,500 to
Ricard Company for $418,000 on January 2, 2020. The sales price
includes an installation fee, which has a standalone selling price
of $40,500. The standalone selling price of the goods is $377,500.
The installation is considered a separate performance obligation
and is expected to take 6 months to complete.
(a) Prepare the journal entries (if any) to record
the sale on January 2, 2020.
Homework Answers
| SOLUTION : | ||||
| Sales Price of Goods | $ 418,000 | |||
| Less: Installation Cost | $ 40,500 | |||
| Standalone price of Goods | $ 377,500 | |||
| Installantion is considered a sepereate obligation means revenue from installation | ||||
| is recorded as separate revenue but installation work in not completed it will expected | ||||
| to take 6 Months to complete so revenue from sale of installation cost is not recorded | ||||
| Jounral entry of the sales is recorded as below, | ||||
| Journal Entries | ||||
| Date | Account Title and explanation | Debit | Credit | |
| Jan 02. 2020 | Account Receivable | $ 418,000 | ||
| Sales Revenue | $ 377,500 | |||
| Unearned Service Revenue | $ 40,500 | |||
| (To record the sales pf Goods and installation ) | ||||
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