On January 1, 2022, Gordon Co. enters into a contract to sell a customer a wiring base and shelving unit that sits on the base in exchange for $3,000. The contract requires delivery of the base first but states that payment for the base will not be made until the shelving unit is delivered. Gordon identifies two performance obligations and allocates $1,200 of the transaction price to the wiring base and the remainder to the shelving unit. The cost of the wiring base is $700; the shelves have a cost of $320.

Instructions

a. Prepare the journal entry for Gordon on January 1, 2022.

b. Prepare the journal entry for Gordon on February 5, 2022, when the wiring base is delivered to the customer.

c. Prepare the journal entry for Gordon on February 25, 2022, when the shelving unit is delivered to the customer and Gordon receives full payment.