I was wondering if you can help me with this accounting problem? On May 1, 2016,

Question

I was wondering if you can help me with this accounting problem? On May 1, 2016, Meta Computer, Inc., enters into a contract to sell 5,900 units of Comfort Office Keyboard to one of its clients, Bionics, Inc., at a fixed price of $100,300, to be settled by a cash payment on May 1. Delivery is scheduled for June 1, 2016. As part of the contract, the seller offers a 25% discount coupon to Bionics for any purchases in the next six months. The seller will continue to offer a 5% discount on all sales during the same time period, which will be available to all customers. Based on experience, Meta Computer estimates a 50% probability that Bionics will redeem the 25% discount voucher, and that the coupon will be applied to $59,000 of purchases. The stand-alone selling price for the Comfort Office Keyboard is $19.00 per unit. The question is Record the entry for Meta on May 1, 2016.?

Explanation / Answer

As on may 1 the contract was entered by meta computer Inc and Bionics Inc. and the advance cash was received for the order so the journal entry on May 1 will be for the advance received

Debit Cash $100,300

Credit Unearned revenue $100,300

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