Question
On July 1, 2016, the Foster Company sold inventory to the Slate Corporation for $310,000. Terms of the sale called for a down payment of
On July 1, 2016, the Foster Company sold inventory to the Slate Corporation for $310,000. Terms of the sale called for a down payment of $77,500 and three annual installments of $77,500 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 $127,100. 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.
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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.) |
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