On August 1, 2017, Aiken Corporation enters into a contract with Benton Corp. to

Question

On August 1, 2017, Aiken Corporation enters into a contract with Benton Corp. to sell it $25,000 of goods. Aiken will deliver the goods on August 30, 2017, and Benton will pay the full amount upon acceptance. The goods were manufactured by Aiken at a cost of $18,000. Both Aiken and Benton consider the acceptance of the goods on August 30 a formality given that Benton has purchased the same goods from Aiken numerous times without incident. On August 30, 2017, Aiken delivers the goods and Benton transfers cash to Aiken.

Required: 1. Does an enforceable contract exist between Aiken and Benton on August 1, 2017?

2. Prepare the journal entries in August 2017 necessary to account for this transaction. Assume Aiken uses a perpetual inventory system.

Explanation / Answer

!) Yes since it meets six criterial

2)entry

Cash $25,000 to sales $25,000 Cost of goods sold $18,000 To Merchandise inventory $18,000

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