You are the senior on an audit engagement for Franco Corp., which is a manufacturer of cellphones. Currently, Franco Corp. manufactures and sells three types of cellphones: Zone-out, Zone-in, and Zone-plus. During 20X1, four retailers entered into contracts with Franco Corp.

On December 15, 20X1, at a recent meeting with the auditors, a director of Franco Corp. asked how the company's contracts and return policies would impact the year-end financial statements with respect to revenue recognition. You were asked to review the contracts for each retail customer and provide the accounting term for the contract that determines additional criteria for revenue recognition, if applicable. In addition, you were asked to provide journal entries related to certain transactions with the retailers. As an accounting policy, Franco Corp. has stated that it accounts for service warranty revenue using the proportion of warranty expense incurred over the total expected costs of fulfilling the warranty.

Part One: For each retailer listed the table below, review the agreements with each retailer provided in the exhibits and choose the appropriate accounting term for the contract. Click in each cell in the second column and select from the list provided. Choose only one response for each item. If no term is applicable, then choose N/A from the list of items.

Part Two: In the table below, provide the journal entries for the requested date that Franco Corp. would record related to its transactions with retailers. The journal entries are based on the transaction detail and terms of the agreements provided in the Exhibits tab. Franco Corp. uses the periodic method of recording inventory. Click on a shaded box in column A and select the desired account title from the list provided. If none is required, select None from the list. You do not need to indent the account(s) to distinguish debits from credits. An account title or an amount may be used once, more than once, or not at all. Important! For Wiley grading purposes, enter debits, and then credits in descending order based on dollar amount for each entry. You may not need all the lines provided. Click on a shaded box in column B and/or C and enter the amount for each debit and credit. Do not use dollar signs but do use commas for thousand separators: e.g., 100,000. If no amount is required, enter zero (0). Record only in shaded boxes.

Entry to record April 25 transaction with Gabbies Inc.: Entry to record June 25 transaction with Talk to Us Corp.: ntry to record March 13 transaction with Lee's Electronics: Entry to record January 18 transaction with Lee's Electronics: Entry to record May 14 transaction with Harvey's Inc.: Entry to record April 3 transaction with Talk to Us Corp.: \begin{tabular}{|l|ll|} \hline Retailer & Accounting Term & \\ \hline Lee's Electronics & & \\ \hline Gabbies Inc. & \\ \hline Talk to Us Corp & \\ \hline Harvey's Inc. & \\ \hline \end{tabular} Entry to record July 18 transaction with Harvey's Inc.: Entry to record April 25 transaction with Gabbies Inc.: Entry to record June 25 transaction with Talk to Us Corp.: ntry to record March 13 transaction with Lee's Electronics: Entry to record January 18 transaction with Lee's Electronics: Entry to record May 14 transaction with Harvey's Inc.: Entry to record April 3 transaction with Talk to Us Corp.: \begin{tabular}{|l|ll|} \hline Retailer & Accounting Term & \\ \hline Lee's Electronics & & \\ \hline Gabbies Inc. & \\ \hline Talk to Us Corp & \\ \hline Harvey's Inc. & \\ \hline \end{tabular} Entry to record July 18 transaction with Harvey's Inc