Question

On May 10, 2020, Cullumber Co. enters into a contract to deliver a product to Greig Inc. on June 15, 2020. Greig agrees to pay the full contract price of $1,810 on July 15, 2020. The cost of the goods is $1,050. Cullumber delivers the product to Greig on June 15, 2020, and receives payment on July 15, 2020. Prepare the journal entries for Cullumber related to this contract. Either party may terminate the contract without compensation until one of the parties performs.

Answer 1

Answer:

Date                 Particular                         Debit    Credit

May 10, 2020  No Entry (Note 1)                $0     $0

                         (To record contact entered into)

June 15, 2020  Account Receivable A/c  $1,810

                                To Sales Revenue A/c            $1,810

                         (To record Sales)

June 15, 2020   Cost of goods sold A/c.    $1,050

                                To Inventory A/c                        $1,050

                         (To record cost of goods sold)

July 15, 2020     Cash A/c                             $1,810

                                 To Account Receivable A/c      $1,810

                          (To record payment received)