Question

On January 1, 2020, Pharoah Co. enters into a contract to sell a customer a wiring base and shelving unit that sits on the base in exchange for $3,100. The contract requires delivery of the base first but states that payment for the base will not be made until the shelving unit is delivered. Pharoah identifies two performance obligations and allocates $1,085 of the transaction price to the wiring base and the remainder to the shelving unit. The cost of the wiring base is $650; the shelves have a cost of $330.

Prepare the journal entry on January 1, 2020, for Pharoah. (Credit account titles are automatically indented when the 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.)

Prepare the journal entry on February 5, 2020, for Pharoah when the wiring base is delivered to the customer. (Credit account titles are automatically indented when the 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.)

Prepare the journal entry on February 25, 2020, for Pharoah when the shelving unit is delivered to the customer and Pharoah receives full payment. (Credit account titles are automatically indented when the 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.)

Answer 1

Answer A :-

The journal entry on January 1, 2020, for Pharoah :-

January 1, 2020 :- No entry - The parties just signed the contract. In this case, no entry recorded until one of the parties performs.

B :-

the journal entries on February 5, 2020, for Pharoah when the wiring base is delivered to the customer :-

Date	journal entry	debit	credit
February 5, 2020	Contract asset	$1,085
	Sales revenue		$1,085
	( To record the sale ,debit the contract asset for it will be contractor's asset and credit the sales revenue for sales, obligation perform)
February 5, 2020	Cost of goods sold	$650
	Inventory		$650
	(To record cost of goods sold, debit the cost of goods sold as our expenses of wire base and credit inventory for it's decreases)

C :-  

The journal entry on February 25, 2020, for Pharoah when the shelving unit is delivered to the customer and Pharoah receives full payment :-

date	journal entry	debit	credit
February 25, 2020	Cash	$3,100
	Contract asset		$1,085
	Sales revenue		$2,105
	(To record sales and collection, debit te cash for receiving and credit the contract asset for allocating and sales revenue for remaining shelving unit )
February 25, 2020	Cost of goods sold	$330
	Inventory		$330
	( To record cost of goods sold , debit the cost of goods as our expenses and inventory as shelves)