Ayayai sells three grain/hay dryers to a local farmer at a total contract price of $44,000. In addition to the dryers, Ayayai provides installation, which has a standalone selling price of $1,100 per unit installed. The contract payment also includes a $1,200 maintenance plan for the dryers for 3 years after installation. Ayayai signs the contract on June 20, 2017, and receives a 20% down payment from the farmer. The dryers are delivered and installed on October 1, 2017, and full payment is made to Ayayai. Prepare the journal entries for Ayayai in 2017 related to this arrangement.
Account Titles and Explanation
Debit
Credit
Jun. 20, 2017
Oct. 1, 2017
(To record payment received)
(To record sales)
(To record cost of goods sold)
Dec. 31, 2017
Homework Answers
| Date | Accounts Title and Explanation | Debit | Credit |
| June 20 ,2017 | Cash | 8800 | |
| Account receivable | 38500 | ||
| Unearned Sales Revenue | 42800 | ||
| Unearned Sales Revenue- Maint | 1200 | ||
| Unearned Sales Revenue - Installation | 3300 | ||
| $ 44000 is the total contract price for the grain/ hay dryers | |||
| it includes $ 1200 as Installation. | |||
| Installation is $ 1100 per dryer = $ 3300 for three dryers | |||
| 20% of Contract price i.e. 20% of 44000 = 8800 received | |||
| Account receivable would be (44000-8800) + 3300 = 38500 | |||
| Oct 1 , 2017 | Cash | 38500 | |
| To Account Receivable | 38500 | ||
| Oct 1 , 2017 | Unearned Sales Revenue | 42800 | |
| Unearned Sales Revenue- Maint | 1200 | ||
| Unearned Sales Revenue - Installation | 3300 | ||
| To Sales Revenue | 47300 | ||
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