On November 1, 2014, Green Valley Farm entered into a contract to buy a $75,000

Question

On November 1, 2014, Green Valley Farm entered into a contract to buy a $75,000 harvester from John Deere. The contract required Green Valley Farm to pay $75,000 in advance on November 1, 2014. The harvester (cost of $55,000) was delivered on November 30, 2014. The journal entry to record the delivery of the equipment includes a

a. debit to Unearned Sales Revenue for $75,000.

b. credit to Unearned Sales Revenue for $75,000.

c. credit to Cost of Goods Sold for $55,000.

d. debit to Inventory for $55,000.

Explanation / Answer

The journal entry would be

1. Cash Dr 75000

To Unearned Revenue 75000

Unearned Sales Revenue 75000

To Sales 75000

The correct answer is

A. Debit to unearned Sales Revenue for $ 75000

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