Question

Carla Company sells on credits goods that cost $299,000 to Ricard Company for $409,500 on January 2, 2020. The sales price includes an installation fee, which has a standalone selling price of $38,000. The standalone selling price of the goods is $371,500. 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) Carla 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 Carla 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

Answer 1

Req a.
Journal entries
S.no.	Accounts title and explanations		Debit $	Credit $
02-Jan	Accounts recievable			409500
	Sales revenue				371500
	Unearned Installation fees			38000
	(for recording the sale on account)
02-Jan	Cost of goods sold			299000
	Merchandise inventory			299000
	(for cost of goods sold)
Req b.
Sales revenue (371500+38000*3/6)	390500
Less: Cost of goods sold		299000
Gross Profit			91500