Question
On December 10, 2019, Kool-Air Solutions agreed to manufacture and supply 775 refrigerators used by Vandelay Industries. Vandelay deposited $100 per unit upon signing the
On December 10, 2019, Kool-Air Solutions agreed to manufacture and supply 775 refrigerators used by Vandelay Industries. Vandelay deposited $100 per unit upon signing the 3-year purchase agreement, which set the selling price of each refrigerator at $935. Kool-Airs inventory cost is $405 per unit. No units were delivered during 2019. During 2020, 175 units will be delivered; during 2021, 345 units will be delivered; and during 2022, the remaining units will be delivered. Assume Kool-Air uses a perpetual inventory system and Vandelay pays in cash upon delivery of units for amounts not covered by the deposit.
Required: | |
1. | Conceptual Connection: Prepare the entry by Kool-Air to record receipt of the deposit during 2019. How would the deposit be reported in the financial statements at the end of 2019? |
2. | Conceptual Connection: Prepare the entry by Kool-Air to record the delivery of 175 units during 2020. How would the deposit be reported in the financial statements at the end of 2020? |
3. | Prepare the entry by Kool-Air to record the delivery of 345 units during 2021. |
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