Nash Company sells on credits goods that cost $310,000 to Ricard Company for $409,500 on January...

Nash Company sells on credits goods that cost $310,000 to Ricard Company for $409,500 on January 2, 2020. The sales price includes an installation fee, which has a standalone selling price of $42,500. The standalone selling price of the goods is $367,000. The installation is considered a separate performance obligation and is expected to take 6 months to complete.

(a) Prepare the journal entries (if any) to record the sale on January 2, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 2, 2020	enter an account title to record the transaction on January 2, 2017	enter a debit amount	enter a credit amount
	enter an account title to record the transaction on January 2, 2017	enter a debit amount	enter a credit amount
	enter an account title to record the transaction on January 2, 2017	enter a debit amount	enter a credit amount
	(To record sales on account)
Jan. 2, 2020	enter an account title to record the transaction on January 2, 2017	enter a debit amount	enter a credit amount
	enter an account title to record the transaction on January 2, 2017	enter a debit amount	enter a credit amount
	(To record cost of goods aold)

(b) Nash prepares an income statement for the first quarter of 2020, ending on March 31, 2020 (installation was completed on June 18, 2020). How much revenue should Nash recognize related to its sale to Ricard?

	First Quarter
Sales Revenue		$enter a dollar amount
Cost of Goods Sold		enter a dollar amount
Gross Profit		$enter a total amount for this statement

show work and explain

Expert Solution

Answer

(a)

Date	Account Titles and Explanation	Debit	Credit
02-Jan	Accounts receivable	$ 409,500
	unearned service revenue		$ 42,500
	Sales revenue		$ 367,000
	(Being Sales revenue and Unearned service revenue recorded)

02-Jan	Cost of goods sold	$ 310,000
	Inventory		$ 310,000
	(Being Cost of goods sold recorded)

(b)	Revenue to be recognized in Income statement (sales excluding Unearned revenue)	=	$ 367,000



	Sales revenue	$ 367,000
	Cost of goods sold	$ 310,000
	Gross Profit	$ 57,000

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