Question

On June 1, 2020, Sandhill Company sells $196,000 of shelving units to a local retailer, ShopBarb, which is planning to expand its stores
in the area. Under the agreement, ShopBarb asks Sandhill to retain the shelving units at its factory until the new stores are ready fo
installation. Title passes to ShopBarb at the time the agreement is signed. The shelving units are delivered to the stores on September
1, 2020, and ShopBarb pays in full. Prepare the journal entries for this bill-and-hold arrangement (assuming that conditions for
recognizing the sale as a bill-and-hold sale have been met) for Sandhill on June 1 and September 1, 2020. The cost of the shelving units
to Sandhill is $109,000.

Answer 1

The journal entries for this bill-and-hold arrangement for Sandhill Company on June 1 and September 1, 2020, are as follows:

June 1, 2020:

Debit Cash $196,000

Credit Sales Revenue $196,000

September 1, 2020: No journal entry is required

Debit Cost of goods sold $109,000

Credit Inventory $109,000

What is a bill-and-hold arrangement?

A bill-and-hold arrangement is a revenue recognition method that records revenue before the delivery of goods to the customer.

Transaction Analysis:

June 1, 2020: Cash $196,000 Sales Revenue $196,000

September 1, 2020:

Cost of goods sold $109,000 Inventory $109,000

Learn more about bill-and-hold sales at brainly.com/question/22941895

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