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 4 days ago
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