On July 1, 2018, Ellsbury Inc. entered into a contract to deliver one of its spe

Question

On July 1, 2018, Ellsbury Inc. entered into a contract to deliver one of its specialty machines to Kickapoo Landscaping Co. The contract requires Kickapoo to pay the contract price of $3,000 in advance on July 15, 2018. Kickapoo pays Ellsbury on July 15, 2018, and Ellsbury delivers the machine (with cost of $1,900) on July 31, 2018. (a) Prepare the journal entry on July 1, 2018, for Ellsbury. (b) Prepare the journal entry on July 15, 2018, for Ellsbury. (c) Prepare the journal entry on July 31, 2018, for Ellsbury.

Explanation / Answer

SOLUTION

* Neither party performed on July 1, 2018

Date Account titles and Explanation Debit ($) Credit ($) July 1, 2018 No entry* July 15, 2018 Cash 3,000 Unearned Sales Revenue 3,000 July 31, 2018 Unearned Sales Revenue 3,000 Sales Revenue 3,000 Cost of Goods Sold 1,900 Inventory 1,900

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