Question

Bonita Company sells goods that cost $320,000 to Ricard Company for $404,500 on January 2, 2020. The sales price includes an installation fee, which has a standalone selling price of $44,000. The standalone selling price of the goods is $360,500. 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. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Date Account Titles and Explanation Debit Credit Jan. 2, 2020 (To record sales on account) Jan. 2, 2020 (To record cost of goods aold)

(b) Bonita prepares an income statement for the first quarter of 2020, ending on March 31, 2020 (installation was completed on June 18, 2020). How much revenue should Bonita recognize related to its sale to Ricard?

Answer 1

Date	Account Titles	Debit	Credit
Jan 2,2020	Accounts Receivable	404500
	Sales Revenue		360500
	Unearned Service Revenue		44000
Jan 2,2020	Cost of goods sold	320000
	Inventory		320000
b
	First Quarter
	Sales Revenue	360500
	Cost of goods sold	320000
	Gross Profit	40500