Unearned Revenue and Customer Deposits}

On November 20, 2017, Billy Gramm Technology agreed to manufacture and supply 1,000 centrifuges used by Cathcart Systems to produce chemicals. Cathcart deposited \(\$ 260\) per unit upon signing the three-year purchase agreement, which set the selling price of each centrifuge at \(\$ 1,300\). Billy Gramm will record these units at \(\$ 500\) per unit in inventory. No units were delivered during 2017. During 2018,350 units will be delivered, 400 units will be delivered during 2019, and the remaining units will be delivered during 2020. Assume Billy Gramm uses a perpetual inventory system.

\section*{Required:}

1. CONCEPTUAL CONNECTION Prepare the entry by Billy Gramm to record receipt of the deposit during 2017. How would the deposit be reported in the financial statements at the end of 2017 ?

2. CONCEPTUAL CONNECTION Prepare the entry by Billy Gramm to record the delivery of 350 units during 2018. How would the deposit be reported in the financial statements at the end of 2018 ?

3. Prepare the entry by Billy Gramm to record the delivery of 400 units during 2019. Cathcart pays in cash upon delivery for the excess of the selling price over the applicable deposit.

\section*{Problem