Skysong Company sells goods that cost $317,000 to Ricard Company for $375,000 on January 2, 2017. The sales price includes an installation fee, which has a standalone selling price of $39,000. The standalone selling price of the goods is $336,000. The installation is considered a separate performance obligation and is expected to take 6 months to complete.
(a) Prepare the journal entry (if any) to record the sale on January 2, 2017.
(b) Skysong prepares an income statement for the
first quarter of 2017, ending on March 31, 2017 (installation was
completed on June 18, 2017). How much revenue should Skysong
recognize related to its sale to Ricard?
| (a) | |||
| Date | Account Titles and Explanation | Debit | Credit |
| 02-Jan | Accounts receivable | $ 3,75,000 | |
| unearned service revenue | $ 39,000 | ||
| Sales revenue | $ 3,36,000 | ||
| (Being Sales revenue and Unearned service revenue recorded) | |||
| 02-Jan | Cost of goods sold | $ 3,17,000 | |
| Inventory | $ 3,17,000 | ||
| (Being Cost of goods sold recorded) | |||
| (b) | Revenue to be recognized in Income statement (sales excluding Unearned revenue) | = | $ 3,36,000 |
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