1. Boris Company enters into a contract with Bella Company to manufacture, deliver, and install a specially made piece of machinery. The total contract price is $10,000,000. The contract provides that $5,000,000 must be paid to Boris when the machine is delivered and $5,000,000 must be paid when installation is complete. The junior accountant properly concluded that delivery of the manufactured machine and installation of the machine represent two separate performance obligations. The accountant properly allocated $1,000,000 of the contract price to the installation obligation and $9,000,000 to the delivery obligation.

Boris delivers the machine to Bellas factory on December 29, 2019 and Boris employees complete the installation of the machine on January 10, 2020. (SHOW ALL WORK)

Required:

Please prepare the appropriate accounting entries for Boris on December 29, 2019 and on January 10, 2020 assuming Bella makes the payments required under the contract.

2. James Company sells college textbooks to State University. Under the terms of the contract, State University may return whatever textbooks it does not sell for a full refund no later than 120 days from the date of delivery. Based on historic sales to State University and other college book stores, 30% of the books delivered are returned for a full refund.

On August 1, 2019, James delivers books to State University with a sales value of $400,000. The books have a cost to James of $10,000. State University immediately pays the amount owed upon delivery.

Required:

Please prepare the entry to reflect the sale of the books for James on August 1, 2019.