Exercise 5-30 Journal entries; point of delivery, installment sales, and cost recovery methods [Appendix]

On July 1, 2016, the Foster Company sold inventory to the Slate Corporation for $180,000. Terms of the sale called for a down payment of $45,000 and three annual installments of $45,000 due on each July 1, beginning July 1, 2017. Each installment also will include interest on the unpaid balance applying an appropriate interest rate. The inventory cost Foster $55,800. The company uses the perpetual inventory system.

Required:1.Prepare the necessary journal entries for 2016 and 2017 using point of delivery revenue recognition. Ignore interest charges.(If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2.Prepare the necessary journal entries for 2016 and 2017, applying the installment sales method.(If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

3.Prepare the necessary journal entries for 2016 and 2017, applying the cost recovery method.(If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)