Question 2 Shaw Company sells goods that cost $282,000 to Ricard Company for $41

Question

Question 2 Shaw Company sells goods that cost $282,000 to Ricard Company for $411,000 on January 2, 2014. The sales price includes an installation fee, which is valued at $39,000. The fair value of the goods is $372,000. The installation is expected to take 6 months.

(a) Prepare the journal entry to record the sale on January 2, 2014. Datte Account Titles and Explanation Debit Credit Jan. 2, 2014

(b) Shaw prepares an income statement for the first quarter of 2014, ending on March 31, 2014. How much revenue should Shaw recognize related to its sale to Ricard? Total revenue $

Explanation / Answer

Hi,

Please find the detailed answer as follows:

Part A: Journal Entry

Accounts Receivables Dr. 411000

Sales Cr. 372000

Unearned Installation Revenue Cr. 39000

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Part B: Calculation of Total Revenue

First Quarter:

Shaw should recoginze a total revenue of $56700.

Thanks.

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