On January 1, 2014, Gordon Co. enters into a contract to sell a customer a wirin

Question

On January 1, 2014, Gordon Co. enters into a contract to sell a customer a wiring base and shelving unit that sits on the base in exchange for $3,240. The contract requires delivery of the base first but states that payment for the base will not be made until the shelving unit is delivered. Gordon identifies two performance obligations and allocates $1,296 of the transaction price to the wiring base and the remainder to the shelving unit. The cost of the wiring base is $756; the shelves have a cost of S346. Prepare the journal entry on January 1, 2014, for Gordon. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Prepare the journal entry on February 5, 2014, for Gordon when the wiring base is delivered to the customer. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually) Prepare the journal entry on February 25, 2014, for Gordon when the shelving unit is delivered to the customer and Gordon receives full payment. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

JANUARY 1 Signing a contract will not require a journal entry unless cash, a promissory note, or another asset is exchanged at the time.So on January 1 there was no cash transaction. so no entry is required

February 5 Accounts receivable Dr $1296

Sales (Wiring base) $1296

February 25   

Accounts receivable Dr $1944

Sales (Shelfing unit) $1944

February 25 Cost of Good Sold a/c Dr $1102

Inventory $1102

When cash is received

cash Dr $3240

Accountrs receivable $3240   

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