Question

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 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.

Answer 1

Date	Account Titles and Explanation	Debit	Credit
31-Jan-17	Cash	$6250
	Sales		$6250
	(50 Dress sold @125 per dress)
28-Feb-17	Cash	6250
	Sales		6250
	(50 Dress sold @125 per dress)
31-Mar-17	Cash	6250
	Sales		6250
	(50 Dress sold @125 per dress)
30-Apr-17	Cash	6250
	Sales		6250
	(50 Dress sold @125 per dress)
31-May-17	Cash	6250
	Sales		6250
	(50 Dress sold @125 per dress)
30-Jun-17	Cash	6250
	Sales		6250
	(50 Dress sold @125 per dress)
31-Jul-17	Cash	6250
	Sales		6250
	(50 Dress sold @125 per dress)
31-Aug-17	Cash	6250
	Sales		6250
	(50 Dress sold @125 per dress)
30-Sep-17	Cash	6250
	Sales		6250
	(50 Dress sold @125 per dress)
31-Oct-17	Cash	6250
	Sales		6250
	(50 Dress sold @125 per dress)
30-Nov-17	Cash	5500
	Sales		5500
	(50 Dress sold @110 per dress)
31-Dec-17	Cash	5500
	Sales		5500
	(50 Dress sold @110 per dress)