Question

Colbert sells 3-D printers along with a number of retail items. The package price and stand-alone selling prices of each item are as follows. The printer and stand are often sold as a bundle with the bundling discount noted below. Item Stand-Alone Selling Price Price When Bundled Bundling Discount 3-D printer (cost $4,000) $5,000 $4,500 $500 Custom stand (cost $200) 450 450 –0– Special 3-D plastic (cost $135) 175 175 –0– Total for bundle $5,625 $5,125 $500 Due to the timing of the delivery—the plastic is delivered six months after the printer is delivered to the customer—Colbert chooses to account for two performance obligations: (1) the printer and stand, and (2) the plastic. Prepare the journal entries for Colbert on March 1, 2020, when Colbert receives $51,250 for the sale of 10 printer bundles, and September 1, 2020, when the plastic are delivered to customers.

Answer 1

Solution:

Date	Accounts title & Explanantion	Debit	Credit
March 1,, 2020	Cash	51,250
	Cost of goods Sold	42,000
	Revenue (Sales)		49,500
	Inventory		42,000
	Advance Received		1,750
	(To record sales & advance recived)
September 1,, 2020	Advance Received	1,750
	Cost of goods Sold	1,350
	Revenue (Sales)		1,750
	Inventory		1,350
	(To record sales)

At March 1 revenue is booked for material deliver (printer + stand). Cost of goods sold also taken for same.

Sales of Plastic will be book on 1st September as risk is transfer on 1st September. Till time it is taken as advance.