.On October 1, Topper Company signs a contract to sell 1,000 tie-dyed shirts for $10,000 ($10.00 each).

On October 8, 900 shirts are delivered and Topper receives $9,000 cash (900 * $10)

a.Prepare the journal entry Topper Company would record to recognize revenue on October 8:

Debit

Credit

On October 15, Topper modifies the agreement to sell an additional 500 tie-dyed shits for $4,000 ($8.00 each * 500 shirts) which is significantly lower than Topper's stand-alone selling price at that time.

So they still need to deliver 100 from the agreement made on October 1 plus another 500 for a total of 600 tie-dyed flags.

On October 31, Topper delivers 100 shirts and receives $1,000 cash.

b.Prepare the journal entry Topper Company would record to recognize revenue on October 31:

Debit

Credit