Question

In: Accounting

Entity A is a manufacturer of consumer goods. On 1 January 2020, Entity A entered into...

Entity A is a manufacturer of consumer goods. On 1 January 2020, Entity A entered into a one-year contract to sell goods to a large global chain of retail stores. The customer committed to buy at least $90,000,000 of products in January. The contract required Entity A to make a non-refundable payment of $200,000 to the customer at the inception of the contract. The $200,000 payment is to compensate the customer for the changes required to its shelving to accommodate Entity A's products. Entity A duly paid this $200,000 to the customer on 3 January 2020.

Entity A transferred goods with an invoice price of $98,000,000 to the customer on 31 January 2020. The customer agreed to settle the outstanding amount by two payments, i.e. 40% and 60% of the outstanding amount on 18 February 2020 and 31 March 2020 respectively.

REQUIRED:

Provide journal entries for Entity A from 1 January 2020 to 31 March 2020 in accordance with relevant accounting standards.

ACCOUNT NAMES FOR INPUT:

| Plant | Machine | Motor van | Equipment | Land | Building | Inventory | Intangible assets |

| Bank | Payable | Receivable | Other income | Other expense | Interest expense | Interest revenue |

| Depreciation | Accum. depreciation | Impairment loss | Reversal of impairment loss | Goodwill |

| Loss on disposal | Gain on disposal | Restoration liability | Revaluation surplus | Revaluation deficit |

| Asset for product to be returned | Commission expense | Commission revenue | Revenue |

| Cost of sales | Refund liability | Contract asset | Contract liability | Retained earnings | No entry |

ANSWERS:

Journal Entries:

Date Account Name Debit ($) Credit ($) Hints For Sequence
1-Jan-20 Blank 1 Blank 2
Blank 3 Blank 4
3-Jan-20 Blank 5 Blank 6
Blank 7 Blank 8
31-Jan-20 Blank 9 Blank 10
Blank 11 Blank 12 P/L item. Judge Dr/Cr side
Blank 13 Blank 14 Judge Dr/Cr side
Blank 15 Blank 16 Judge Dr/Cr side
18-Feb-20 Blank 17 Blank 18
Blank 19 Blank 20
31-Mar-20 Blank 21 Blank 22
Blank 23 Blank 24

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