Question

Palantir Corp. sells specialized equipment to the healthcare industry. Palantir pays its sales agents a salary plus a 5% commission on sales. Sales agents employed by the company sold 10 Osgilith MRI machines that were delivered and installed in January 2017. The MRI machine sells for $45,600 due at the end of 12 months. Alternatively, customers may elect to pay $40,000 at delivery and installation. All customers purchasing machines during January elected to pay at the end of the 12-month period.

Required:

1.	Determine the transaction price of the Osgilith MRI machines, and discuss how Palantir would account for the sales commission.
2.	Discuss whether the delayed payment contract contains a significant financing component.
3.	Prepare the journal entries for 2017 for the Osgilith MRI machines sold by Palantir to customers who elect the delayed payment option.
4.	Prepare the 2017 journal entries that Palantir would make for the 10 Osgilith MRI machines that are sold if customers elect to pay at deliver

**The answers posted by others for the General Ledger are not correct. Please post correct answer.

Answer 1

As requested, answers for general ledger only, are as under:

3) If customers elect the delayed payment option:

General Ledger

Date	Account Title		Debit	CRedit
31-Dec-2017	Accounts Receivale A/c To Sales A/c	Dr.	456,000	456,000
	(Being the accounts became due at the end of the year since all the customers elected to pay at the end of 12 month period) [45600X10=45600]
31-Dec-2017	Profit & Loss A/c To Sales Commission A/c	Dr.	22,800	22,800
	(Being commission became due for the year) [ 456000 X 5% = 22800]
.....................	Cash / Bank A/c To Accounts Receivable A/c	Dr.	456,000	456,000
	(Being amount received for the sales made at the beginning of the year)
......................	Sales Commission Expense A/c To Cash / Bank A/c	Dr.	22,800	22,800
	(Being payment made for the sales commission became due for the year)

4) If customers elect to pay at deliver:

General Ledger

Date	Account Title		Debit	CRedit
01-Jan-2017	Accounts Receivale A/c To Sales A/c	Dr.	400,000	400,000
	(Being the accounts became due at the beginning of the year since all the customers elected to pay at delivery and installation) [40,000X10=400,000]
01-Jan-2017	Profit & Loss A/c To Sales Commission A/c	Dr.	20,000	20,000
	(Being commission became due for the sales made at the beginning of the year) [ 400,000 X 5% = 20,000]
01-Jan-2017	Cash / Bank A/c To Accounts Receivable A/c	Dr.	400,000	400,000
	(Being amount received for the sales made at the beginning of the year)
01-Jan-2017	Sales Commission Expense A/c To Cash / Bank A/c	Dr.	20,000	20,000
	(Being payment made for the sales commission became due for the year)