Question
1. On October 1, Topper Company signs a contract to sell 1,000 tie-dyed shirts for $10,000 ($10.00 each). On October 8, 900 shirts are delivered
1. On October 1, Topper Company signs a contract to sell 1,000tie-dyed shirts for $10,000 ($10.00 each).
On October 8, 900shirts are delivered and Topper receives $9,000 cash (900 * $10)
- Prepare the journal entry Topper Company would record to recognize revenue on October 8:
|
| Debit | Credit |
| Cash | $9,000 |
|
| Unearned Revenue |
| $9,000 |
On October 15, Topper modifies the agreement to sell an additional 500 tie-dyed shitsfor $4,000 ($8.00 each * 500 shirts) which is significantly lower than Toppers stand-alone selling price at that time.
So they still need to deliver 100from the agreement made on October 1 plus another 500for a total of 600tie-dyed flags.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Intermediate Accounting
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
18th Edition
1119790972, 9781119790976
