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I need help with the blank parts of the question. Preferably a chart would be helpful, thank you ! On August 31, 2016, the Silva
I need help with the blank parts of the question. Preferably a chart would be helpful, thank you !
On August 31, 2016, the Silva Company sold merchandise to the Bendix Corporation for $500,000. Terms of the sale called for a down payment of $100,000 and four annual installments of $100,000 due on each August 31, beginning August 31, 2017. Each installment also will include interest on the unpaid balance applying an appropriate interest rate. The book value of the merchandise on Silva's books on the date of sale was $300,000. The perpetual inventory system is used. The company's fiscal year-end is December 31. 2. Prepare journal entries for each of the five years applying for the three revenue recognition methods. Ignore interest charges. Point of Delivery Debit Credit Installment Sales Debit Credit Cost Recovery Debit Credit General Journal To record sale on 8/31/16: Installment receivable Sales revenue 500,000 500,000 300,000 Cost of goods sold Inventory 300,000 500,000 500,000 To record sale on 8/31/16: Cash Installment receivable Deferred gross profit 300,000 200,000 300,000 200,000 To record cash collections (Entry made each Aug. 31) Cash 100,000 Installment receivable 100,000 100,000 100,000 100,000 100,000 To record gross profit. (Entry made each Aug. 31) Deferred gross profit Realized gross profit 40,000 0 40,000 0 To record gross profit (Entry made 8/31/19 & 8/31/20 Deferred gross profit Realized gross profit 0 100,000 0 100,000Step by Step Solution
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