Entity A is a Hong Kong-based limited company that participates in the building material industry for many years. It sells high-quality raw materials to different local and foreign manufacturers. Entity B is one of its loyal customers for more than 30 years.

On 1 January 2020, Entity A received an advanced payment of $4,560,000 from Entity B through the Hong Kong City Bank for selling Material X. According to the contract terms, Entity A would only deliver Material X to Entity B on 31 December 2020. The regular cash-selling price of Material X was $4,560,000. The cost of sales of Material X was $3,333,000.

On 1 January 2021, Entity A entered into another contract with Entity B. This contract stated that Entity A was required to transfer Material Y and Material Z to Entity B in exchange for $2,681,500. According to the contract terms, Entity A could invoice this full amount on 31 January 2021. Material Y was to be delivered on 28 February 2021 and Material Z was to be delivered on 31 March 2021. Both promises to transfer Material Y and Material Z were identified as separate performance obligations. The amount of $1,256,000 was allocated to Material Y and $1,425,500 to Material Z respectively. The cost of sales of Material Y and Material Z were 75% and 65% of their selling prices respectively. Entity A received a crossed cheque from Entity B of Material Y and Material Z on 30 April 2021.

The market interest rate for the year 2020 and 2021 were 6.25% and 6.50% respectively. Entity A adopts a perpetual inventory system for keeping its inventory accounting records. Entity A recognises revenue when control of each material transfers to Entity B.

REQUIRED:

Provide journal entries for Entity A from 1 January 2020 to 30 April 2021 under relevant accounting standards.

ACCOUNTS FOR INPUT:

| Bank | Payable | Receivable | Interest expense | Interest revenue | Inventory | PPE |

| Asset for product to be returned | Commission expense | Commission revenue | Revenue |

| Cost of sales | Contract asset | Contract liability | Retained earnings | No entry |

ANSWER:

Journal Entries:

Date	Account Name	Debit ($)	Credit ($)	Hints For Sequence
1-Jan-20				-
				-
31-Dec-20				-
				-
31-Dec-20				-
				-
				-
				-
1-Jan-21				-
				-
31-Jan-21				-
				-
28-Feb-21				-
				-
				-
				-
31-Mar-21				-
				-
				-
				-
30-Apr-21				-
				-