Question

On July 8, Compusoft receives $200,000 from a customer toward a cash sale of $0.90 million for customized computer equipment to be completed on August 1. The remaining $700,000 payment is received upon delivery of the product on August 1. The equipment had a total production cost of $650,000.
What journal entries should Compusoft record on July 8 and August 1?

Answer 1

Answer:

The Journal entry and their narrations is shown below

Explanation:

The Journal entry is shown below:-

1. Cash Dr, $200,000  

        To Unearned sales revenue $200,000

(Being unearned sales revenue is recorded)

2. Cash Dr, $700,000  

Unearned sales revenue Dr, $200,000  

         To Sales revenue $500,000

(Being sales revenue is recorded)

3. Cost of Goods Sold Dr, $650,000  

           To Merchandise inventory $650,000

(Being cost of goods sold is recorded)