Question

(c) Waterway sells three grain/hay dryers to a local farmer at a total contract price of $49,200. In addition to the dryers, Waterway provides installation, which has a standalone selling price of $900 per unit installed. The contract payment also includes a $1,200 maintenance plan for the dryers for 3 years after installation. Waterway signs the contract on June 20, 2020, and receives a 20% down payment from the farmer. The dryers are delivered and installed on October 1, 2020, and full payment is made to Waterway. Prepare the journal entries for Waterway in 2020 related to this arrangement. (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. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit Jun. 20, 2020 Oct. 1, 2020 (To record payment received) (To record sales) (To record cost of goods sold) Dec. 31, 2020 V

Answer 1

c)

Journal Entries:

Date	Account Titles and Explanation	Debit	Credit
June 20,2020	Account Receivable	$ 49,200
	Installation Payable ( 3 units * $ 900 per unit)		$ 2,700
	Maintenance Payable		$ 1,200
	Sales Revenue ($ 49200 * 20%)		$ 9,840
	Unearned Revenue ( $ 49200-2700-1200-9840)		$ 35,460
	(To record the contract)
Oct 1, 2020	Cash	$ 9,840
	Account Receivable		$ 9,840
	(To record the collection of down payment)
Oct 1, 2020	Unearned Revenue	$ 35,460
	Cash ($ 49,200 - 9,840)	$ 39,360
	Sales Revenue		$ 35,460
	Account Receivable		$ 39,360
	(To record the sales))
Oct 1, 2020	Cost of Goods Sold ( $ 49200 - 2700 - 1200)	$ 45,300
	Inventory		$ 45,300
	(To record the cost of goods sold)
Dec 31, 2020	Installation Payable	$ 2,700
	Installation		$ 2,700
	(To record the installation expense)