Accounting in Revenue Recognition On May 1, 2017, Ivanhoe Inc. entered into a co

Question

Accounting in Revenue Recognition

On May 1, 2017, Ivanhoe Inc. entered into a contract to deliver one of its specialty mowers to Kickapoo Landscaping Co. The contract requires Kickapoo to pay the contract price of $812 in advance on May 15, 2017. Kickapoo pays Ivanhoe on May 15, 2017, and Ivanhoe delivers the mower (with cost of $495) on May 31, 2017.

a) Prepare the journal entry on May 1, 2017, for Ivanhoe.

(b) Prepare the journal entry on May 15, 2017, for Ivanhoe.

c) Prepare the journal entry on May 31, 2017, for Ivanhoe.

Explanation / Answer

a May-1-17 No entry 0     No entry 0 b May-15-17 Cash 812      Unearned Revenue 812 c May-31-17 Unearned Revenue 812       Sales revenue 812 May-31-17 Cost of goods sold 495       Inventory 495

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