Kitt Ranch & Farm sells three grain/hay dryers to a local farmer at a total contract price of $48,000. The stand-alone price for each grain/hay dryer is $15,000 and the cost of each grain/hair dryer is $11,500. In addition to the dryers, Kitt provides installation which has a stand-alone sales value of $1,000 per unit installed. The contract price also includes a maintenance plan of $2,000 for the maintenance of the three dryers for three years after installation.

On July 2, 2020, Kitt signs the contract and receives full payment from the farmer. On the same day, the dryers are delivered to the farmer and installed. Round percentage allocations to two decimal places and final amounts to the nearest dollar.

Required:

1. Prepare the journal entries for Kitt in 2020 related to this agreement as well as any adjusting journal entries at its December year end. (8 marks) Entry(ies) on July 2, 2020 and Entry on Dec. 31, 2020