Question

At 1. March, 2017, Crandall Co. made a contract to sell 100 products to a customer for €10,000 (€100 per product) at various points in time over a six-month period. The company is going to deliver the products in two ways, 60 units at May 1, 2017 and 40 units at July 1, 2017.After 60 products have been delivered at May 1, 2017, Crandall modifies the contract by promising to deliver 20 more products for an additional €1,900, or €95 per product (which is the standalone selling price of the products at the time of the contract modification) before September 1, 2017. Crandall regularly sells the products separately.

What journal entries should Crandall company make regards to this contract 2017? Show journal entries for:

a) 1. March 2017 - When the contract is made

b) 1. May 2017 - when the company delivers the first 60 untis

c) 1. July 2017 - when the company delivers the next 40 units

d) 1. September 2017 - when the company delivers the last 20 units

Answer 1

a) When the contract is signed, there will be no journal entries as there is no transaction involved between the parties.

	Date
b)	5/1/2017	Customer A/c	6000
		Sales A/c		6000
		(Being 60 of the 100 Products Sold in the first Order)
c)	7/1/2017	Customer A/c	4000
		Sales A/c		4000
		(Being remaining 40 Products Sold in the Second Order)
d)		Customer A/c	1900
		Sales A/c		1900
		(Being 20 Products Sold in the Final Order)