Question

In: Accounting

On January 1, 2017, Spring Fashions Inc. enters into a contract with a southeast retail company...

On January 1, 2017, Spring Fashions Inc. enters into a contract with a southeast retail company to provide 500 dresses for $62,500 ($125 per dress) over the next 10 months. On October 1, 2017, after 450 of the dresses had been delivered (50 dresses per month), the contract is modified.

Required:

1. Fifty dresses were delivered each month for the first 9 months of 2017. Prepare Spring Fashions’s monthly journal entry to record revenue.
2. Assume that the contract is modified to sell, once the original 500 dresses are delivered, an additional 100 dresses at $110 per dress, which is the stand-alone selling price on October 1, 2017. Assume the dresses are delivered evenly in November and December 2017. Prepare the journal entries to record the contract modification.

Prepare journal entries to record a monthly cash sale on January 31 under the original contract and a monthly cash sale on November 30 under the modified contract.

Solutions

Expert Solution

Date Account Titles Debit Credit
Jan 2017 Cash 6250
Sales Revenue 6250
[50 dresses @ $125 per dress]
Feb 2017 Cash 6250
Sales Revenue 6250
[50 dresses @ $125 per dress]
March 2017 Cash 6250
Sales Revenue 6250
[50 dresses @ $125 per dress]
April 2017 Cash 6250
Sales Revenue 6250
[50 dresses @ $125 per dress]
May 2017 Cash 6250
Sales Revenue 6250
[50 dresses @ $125 per dress]
June 2017 Cash 6250
Sales Revenue 6250
[50 dresses @ $125 per dress]
July 2017 Cash 6250
Sales Revenue 6250
[50 dresses @ $125 per dress]
August 2017 Cash 6250
Sales Revenue 6250
[50 dresses @ $125 per dress]
September 2017 Cash 6250
Sales Revenue 6250
[50 dresses @ $125 per dress]
October 2017 Cash 6250
Sales Revenue 6250
[50 dresses @ $125 per dress]
November 2017 Cash 5500
Sales Revenue 5500
[50 dresses @ $110 per dress]
December 2017 Cash 5500
Sales Revenue 5500
[50 dresses @ $110 per dress]

ekkarill92 answered 10 months ago
Next > < Previous

Related Solutions

Can you explain how to solve this problem? On January 1, 2017, Spring Fashions Inc. enters...
Can you explain how to solve this problem? On January 1, 2017, Spring Fashions Inc. enters into a contract with a southeast retail company to provide 500 dresses for $62,500 ($125 per dress) over the next 10 months. On October 1, 2017, after 450 of the dresses had been delivered (50 dresses per month), the contract is modified. Required: 1: Fifty dresses were delivered each month for the first 9 months of 2017. Prepare Spring Fashions’s monthly journal entry to...
On January 1, 2017, Loud Company enters into a 2-year contract with a customer for an...
On January 1, 2017, Loud Company enters into a 2-year contract with a customer for an unlimited talk and 5 GB data wireless plan for $65 per month. The contract includes a smartphone for which the customer pays $299. Loud also sells the smartphone and monthly service plan separately, charging $649 for the smartphone and $65 for the monthly service for the unlimited talk and 5 GB data wireless plan. On July 1, 2017, the customer realizes that she needs...
On January 1, 2017, Loud Company enters into a 2-year contract with a customer for an...
On January 1, 2017, Loud Company enters into a 2-year contract with a customer for an unlimited talk and 5 GB data wireless plan for $65 per month. The contract includes a smartphone for which the customer pays $299. Loud also sells the smartphone and monthly service plan separately, charging $649 for the smartphone and $65 for the monthly service for the unlimited talk and 5 GB data wireless plan. Required: 1. Calculate the transaction price for the smartphone and...
On January 1, 2017, Loud Company enters into a 2-year contract with a customer for an...
On January 1, 2017, Loud Company enters into a 2-year contract with a customer for an unlimited talk and 5 GB data wireless plan for $65 per month. The contract includes a smartphone for which the customer pays $299. Loud also sells the smartphone and monthly service plan separately, charging $649 for the smartphone and $65 for the monthly service for the unlimited talk and 5 GB data wireless plan. Required: 1. Calculate the transaction price for the smartphone and...
On January 1, 2017, Fulton Inc. enters into a contract with Gibson to deliver goods. Gibson...
On January 1, 2017, Fulton Inc. enters into a contract with Gibson to deliver goods. Gibson pays $100,000 at the time the contract is signed, at which time the goods are transferred and Fulton’s performance obligation is complete. In addition, Gibson agrees to pay Fulton $100,000 on December 31, 2017, and December 31, 2018. If Fulton entered into a financing arrangement with Gibson it would charge an interest rate of 9%. Required: 1. Determine the transaction price for the contract...
Determine the Transaction Price On January 1, 2017, Loud Company enters into a 2-year contract with...
Determine the Transaction Price On January 1, 2017, Loud Company enters into a 2-year contract with a cus- tomer for an unlimited talk and 5 GB data wireless plan for $65 per month. The contract includes a smartphone for which the customer pays $299. Loud also sells the smartphone and monthly service plan separately, charging $649 for the smartphone and $65 for the monthly service for the unlimited talk and 5 GB data wireless plan. Required: 1. Calculate the transaction...
On January 1, 2019, Fulton Inc. enters into a contract with Gibson to deliver goods. Gibson...
On January 1, 2019, Fulton Inc. enters into a contract with Gibson to deliver goods. Gibson pays $100,000 at the time the contract is signed, at which time the goods are transferred and Fulton’s performance obligation is complete. In addition, Gibson agrees to pay Fulton $100,000 on December 31, 2019, and December 31, 2020. If Fulton entered into a financing arrangement with Gibson it would charge an interest rate of 9%. Required: 1. Determine the transaction price for the contract...
On January 1, 2017, Marlene Corp. enters into an agreement with Dietrich Rentals Inc. to lease...
On January 1, 2017, Marlene Corp. enters into an agreement with Dietrich Rentals Inc. to lease a machine from them. Both corporations adhere to ASPE. The following data relate to the agreement: 1. The term of the non-cancellable lease is three years with no renewal option. Payments of $271,622 are due on December 31 of each year. 2. The fair value of the machine on January 1, 2017, is $700,000. The machine has a remaining economic life of 10 years,...
As of January 1, 2017, Cheyenne Inc. adopted the retail method of accounting for its merchandise...
As of January 1, 2017, Cheyenne Inc. adopted the retail method of accounting for its merchandise inventory. To prepare the store’s financial statements at June 30, 2017, you obtain the following data. Cost Selling Price Inventory, January 1 $30,800 $43,600 Markdowns 9,400 Markups 9,100 Markdown cancellations 6,000 Markup cancellations 3,200 Purchases 116,576 155,700 Sales revenue 151,500 Purchase returns 2,800 4,400 Sales returns and allowances 7,800 Part 1 Correct answer iconYour answer is correct. Compute Cheyenne’s June 30, 2017, inventory under...
As of January 1, 2017, Waterway Inc. adopted the retail method of accounting for its merchandise...
As of January 1, 2017, Waterway Inc. adopted the retail method of accounting for its merchandise inventory. To prepare the store’s financial statements at June 30, 2017, you obtain the following data. Cost Selling Price Inventory, January 1 $33,000 $42,800 Markdowns 9,800 Markups 9,800 Markdown cancellations 6,000 Markup cancellations 3,200 Purchases 96,328 152,400 Sales revenue 151,900 Purchase returns 2,800 4,100 Sales returns and allowances 7,700 Compute Waterway’s June 30, 2017, inventory under the conventional retail method of accounting for inventories....
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT