Exercise 6-21

Carla Vista Company is involved in the design, manufacture, and installation of various types of wood products for large construction projects. Carla Vista recently completed a large contract for Stadium Inc., which consisted of building 35 different types of concession counters for a new soccer arena under construction. The terms of the contract are that, upon completion of the counters, Stadium would pay $3,500,000. Unfortunately, due to the depressed economy, the completion of the new soccer arena is now delayed. Stadium has therefore asked Carla Vista to hold the counters for two months at its manufacturing plant until the arena is completed. Stadium acknowledges in writing that it ordered the counters and that it now has ownership. The time that Carla Vista Company must hold the counters is totally dependent on when the arena is completed. Because Carla Vista has not received additional progress payments for the arena due to the delay, Stadium has provided a deposit of $525,000. (c) Prepare the journal entry that Carla Vista should make, assuming it signed a valid sales contract to sell the counters and received the $525,000 deposit at the time. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)