Grill Master offers contract GM205, which is comprised of a free-standing gas gr
ID: 2463025 • Letter: G
Question
Grill Master offers contract GM205, which is comprised of a free-standing gas grill for small patio use plus installation to a customer’s gas line for a total price $770. On a standalone basis, the grill sells for $650 (cost $470), and Grill Master estimates that the fair value of the installation service (based on cost-plus estimation) is $155. Grill Master signed 16 GM205 contracts on April 20, 2014, and customers paid the contract price in cash. The grills were delivered and installed on May 15, 2014.
Prepare journal entries for Grill Master for GM205 in April and May 2014. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
Date
Account Titles and Explanation
Debit
Credit
Apr. 20, 2014
May 15, 2014
(To record revenue)
May 15, 2014
(To record cost of goods sold)
Date
Account Titles and Explanation
Debit
Credit
Apr. 20, 2014
May 15, 2014
(To record revenue)
May 15, 2014
(To record cost of goods sold)
Explanation / Answer
Total selling price = 650 +155 = 805
% og grill = 650 /805 = .8075
% of Grill master = 155/ 805 = .1925
Date Account title Debit credit April 20 2014 cash 770 Unearned service revenue 770 [being contract made ] May 150 2014 Unearned service revenue 770 Grill revenue [770* .8075 ] 621.78 Grill master installation revenue [770* .1925] 148.22 [revenue recorded] May 15 2014 cost of goods sold 470 Grill Inventory 470 [cost of goods sold recorded ]Related Questions
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