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2 years ago

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On May 10, 2020, Splish 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 $2,060 on July 15, 2020. The cost of the goods is $1,380. Splish delivers the product to Greig on June 15, 2020, and receives payment on July 15, 2020. Prepare the journal entries for Splish related to this contract. Either party may terminate the contract without compensation until one of the parties performs.

1 answer:

Amiraneli [1.4K]2 years ago

4 0

Answer:

May 15, 2020

No Entry

June 15, 2020

Debit: Account Receivable 2,060

Credit Revenue 2,060

Debit COGS 1,380

Credit Inventory 1,380

July 15, 2020

Debit Cash 2,060

Credit Account Receivable 2,060

Explanation:

Preparation of the journal entries for Splish related to this contract.

May 15, 2020

No Entry

June 15, 2020

Debit: Account Receivable 2,060

Credit Revenue 2,060

Debit COGS 1,380

Credit Inventory 1,380

July 15, 2020

Debit Cash 2,060

Credit Account Receivable 2,060

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The net value of the payments vs. receipts in today's dollars is ($11,102).

<h3>What is the present value?</h3>

The present value of future cash flows is the current value or the value in today's dollars. It is computed by discounting the future values at the appropriate discount rate.

The present value can be computed using the Present Value formula, an online finance calculator, or the PV factor table.

Formula

PV=FV \frac{1}{(1+r)^{n}}

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<h3>Data and Calculations:</h3>

Interest rate = 12%

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Year 3 ($16,000) 0.712 -$11,392 ($16,000 x 0.712)

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2 years ago

Durable Goods $1,250 Nondurable Goods $2,130 Services $9,000 Fixed Investment $1,800 Changes to Business Inventory $135 Investme

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Answer:

Given that,

Durable Goods = $1,250

Non-durable Goods = $2,130

Services = $9,000

Fixed Investment = $1,800

Changes to Business Inventory = $135

Investment in Stocks & Bonds = $15,500

Federal Government Purchases = $1,800

State/Local Government Purchases = $1,700

Transfer Payments = $675

Exports from the United States = $2,100

Imports into the United States = $2,400

(a) Consumption, C = durable goods + non-durable goods + services

= $1,250 + $2,130 + $9,000

= $12,380

(b) Private investment, I = Fixed investment + change in inventory + Investment in stocks/bonds

= $1,800 + $135 + $15,500

= $17,435

(c) Government spending, G = Federal government purchase + state/local government purchase

= $1,800 + $1,700

= $3,500

(d) Net exports = Exports - Imports

= $2,100 - $2,400

= -($300)

GDP = C + I + G + NX

= $12,380 + $17,435 + $3,500 + (-$300)

= $33,015

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