Question

In September 2020, Skysong Corp. commits to selling 158 of its iPhone-compatible docking stations to Better Buy Co. for $14,220 ($90 per product). The stations are delivered to Better Buy over the next 6 months. After 82 stations are delivered, the contract is modified and Skysong promises to deliver an additional 48 products for an additional $4,080 ($85 per station). All sales are cash on delivery.

Correct answer iconYour answer is correct.

Prepare the journal entry for Skysong for the sale of the first 82 stations. The cost of each station is $56. (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.)

Account Titles and Explanation	Debit	Credit
enter an account title to record sales	enter a debit amount	enter a credit amount
enter an account title to record sales	enter a debit amount	enter a credit amount
(To record sales)
enter an account title to record cost of goods sold	enter a debit amount	enter a credit amount
enter an account title to record cost of goods sold	enter a debit amount	enter a credit amount
(To record cost of goods sold)

Correct answer iconYour answer is correct.

Prepare the journal entry for the sale of 10 more stations after the contract modification, assuming that the price for the additional stations reflects the standalone selling price at the time of the contract modification. In addition, the additional stations are distinct from the original products as Skysong regularly sells the products separately. (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.)

Account Titles and Explanation	Debit	Credit
enter an account title to record sales	enter a debit amount	enter a credit amount
enter an account title to record sales	enter a debit amount	enter a credit amount
(To record sales)
enter an account title to record cost of goods sold	enter a debit amount	enter a credit amount
enter an account title to record cost of goods sold	enter a debit amount	enter a credit amount

Prepare the journal entry for the sale of 10 more stations (as in (b)), assuming that the pricing for the additional products does not reflect the standalone selling price of the additional products and the prospective method is used. (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. Round answers to 2 decimal places, e.g. 1,525.25.)

Account Titles and Explanation	Debit	Credit
enter an account title to record sales	enter a debit amount	enter a credit amount
enter an account title to record sales	enter a debit amount	enter a credit amount
(To record sales)
enter an account title to record cost of goods sold	enter a debit amount	enter a credit amount
enter an account title to record cost of goods sold	enter a debit amount	enter a credit amount

Answer 1

Answer: preparation of Journal Entries
S. No.	Account Titles and Explanation	Debit $	Credit $
a.	Cash (82 Station X $90)	$7,380
	Sales Revenue		$7,380
	(To record the sale of Stations)
	Cost of Goods Sold (82 stations X $56)	$4,592
	Inventory		$4,592
	(To record the cost of goods sold)
b	Cash ( 10 Stations X $90)	$900
	Sales Revenue		$900
	(To record the sale of additional Stations)
	Cost of Goods Sold (10X$56)	$560
	Inventory		$560
	(To record the cost of goods sold)
c	Cash	$880.60
	Sales Revenue		$880.60
	(To record the sale of additional Stations)
	Cost of Goods Sold (10X$56)	$560
	Inventory		$560
	(To record the cost of goods sold)
Workings: Balance no. of stations = 158 (-) 82 = 76 Cost of Bal stations       =   76 x $90 = $6,840 + Cost additional stations                                                $6,840 + $4,080 = $10,920 Total no. of products = 76 + 48 =   124 Selling price = $10,920 / 124 = $88.06 Sale of additional 10 units = 10 x $88.06 = $880.60